Your Legal Rights Following Your Canadian Job Loss

By Constance Olsheski, LLB MBA
Lang Michener LLP

After the news of the economic crisis subsides the next headline to dominate the news will be the job losses being experienced in this recession. 500,000 in the auto industry, and 100,000s more in other industries.

If you are one of those newly unemployed, this article will discuss your legal rights following your termination.

There are two separate sets of laws that protect you if you have been terminated because of restructuring or cost cutting, or for any other reason, other than for cause.

The first are those identified in the Employment Standards Act of Ontario, or the employment standards legislation in every other province. In Ontario, (with similar provisions in other provinces’ legislation) a terminated employee is to be provided with the following:

1. One week of notice (or payment in lieu of notice) for every year work, to a maximum of eight (8) weeks, plus your full benefits for this period; and

2. If you have been employed for over five years and if your employer has a payroll of over $2.5 Million, then you are entitled to a further week of severance pay for each year worked to a maximum of 26 weeks; and

3. You are of course entitled to outstanding wages, overtime pay, vacation pay commissions.

If your employer has not honoured these payments then you can either have a lawyer pursue them or your behalf or you can file a claim, under the act, yourself. If you pursue it yourself+ you are limited to a $10,000 claim, and cannot then pursue your employer for anything owed in excess of $10,000.

The other set of laws that apply once you are terminated is the common law, which is pursued through the civil courts. This can necessitate the initiation of a lawsuit, but with over 95% of cases settling before a trial, the risk of a lawsuit is not quite as intimidating as it may initially appear.

The principles of common law states that each individual is entitled to his/her own notice period, or payment in lieu of notice, or severance (all essentially the same legal right) despite what other individuals have been provided or denied. A judge in assessing the severance to which you are legally entitled will make a subjective determination based on many factors, including the number of years you worked with your employer; whether you were induced to accept employment and thus forfeited otherwise secure employment at your previous job; your age; your position; your compensation; your responsibilities; and the likelihood in the current marketplace of you finding alternative employment. Judges frequently award employees approximately one month per year for each year of employment, but that can be higher depending on your particular set of circumstances. It is rarely lower.

Even though terminated, you can still also pursue other outstanding issues in the civil action, including payment for overtime, any unfulfilled promises for bonuses, commissions, car allowance, the benefits you enjoyed as an employee, further contributions to your RRSO and/or pension, and in some cases damages for mental distress.

Although it may initially appear expensive, it may well be worth it to seek legal assistance to obtain the full amount owed to you following your termination. Not only will you get what you are legally owed, in many cases, lawyers can obtain payment in whole or in part for your legal fees.

The laws regarding the assistance to someone who is terminated are there to ensure that you have a reasonable and fair financial bridge to your new employment. Don’t hesitate to cross that bridge.