termination package

Subscribe to termination package

Mitigation issues can save an employer months of termination pay and/or gut your termination case, depending on whether you are the employer or employee in a dispute.

But what exactly is mitigation? This post sets out the basics.

What is Mitigation?

In Canadian employment law, mitigation refers to the legal obligation of an employee who…

Unlimited Paid Time Off Policies - Proceed with Caution!We’ve been hearing about unlimited paid time off  (PTO) for some time, but it is not yet a common trend in Canada. However, from time to time in our employment law practice, we encounter employers who offer unlimited or unstructured time off to their employees.

At first glance,  unlimited PTO may sound wonderful and generous, and employers may offer it to foster a positive workplace culture and promote work-life balance. However,  without addressing potential issues via contracts and policies, offering unlimited and unstructured time off could cause more headaches than benefits for both the employers and the employees. 
Continue Reading Unlimited Paid Time Off Policies – Proceed with Caution!

We’ve written about terminations in several of our blog posts throughout the years. Some of our employer readers (and clients) may recall scrambling to update their employment contracts following the 2020 release of Waksdale v. Swegon North America Inc. (2020 ONCA 391). Still, many employers who are seeking to terminate their indefinite-term employees on a without cause basis believe that as long as they provide their employees with 2 weeks of notice, or the period of notice set out in the Employment Standards Act, 2000, they are off the hook. More often than not, this notice period is legally insufficient. So, what is the applicable notice period? 
Continue Reading Firing Employees with 2 Weeks of Notice May be Insufficient

Over the course of the past year, many people have had reductions in earnings and received some form of government income assistance - EI, CERB or Canada Recovery Benefit (CRB). In some cases, employees who initially thought that their interruption or reduction in earnings was temporary have had their employment terminated.  In almost all termination situations an employee will be entitled to some form of termination payment from the employer. Employees who are also receiving government income assistance may wonder how their government payments will be impacted by their termination packages.  While not everything is crystal clear at this point, we have some thoughts! Layoffs and the Deemed IDEL  As noted, in some circumstances, employees have been temporarily laid off. During 2020, these layoffs converted into Deemed Infectious Disease Emergency Leaves (IDEL). Unless an employee is terminated, these Deemed IDELs will continue during the COVID-19 Period, which is presently set to end July 3, 2021.  While an employee is not receiving income, or while they are receiving 50% or less of their pre-COVID income due to COVID-19 reasons, they will typically be eligible for EI or the CRB.  Employees who have not had their employment ended at the end of the COVID-19 Period can expect to either be recalled to work or be placed on a temporary layoff. A temporary layoff can continue for up to 35 weeks if the employer continues the employee benefits. An employee can expect to continue to be eligible for CRB or EI after the COVID-19 period should they be continued on a layoff.  Terminations, EI, CERB and CRB An employee who is terminated while on the Deemed IDEL should receive their termination entitlements up to the date of their termination. This means that for the purposes of calculating length of service the employee’s time on the Deemed IDEL should be included. This should also mean that the income replacement benefits that the employee received prior to their termination date should not be required to be paid back, for reasons of double-dipping. The termination package should cover a time period after the termination date and therefore not impact the benefits received prior to the termination date.   While it is not 100% clear how the CRA will treat an employee’s continued entitlement to income replacement benefits following the termination date after the employee receives a termination package there are a few general principles:  EI - Typically an employee will not be entitled to EI when they are receiving income from the employer, and EI will regard termination payments as income. However, the government’s EI FAQs state that “As a temporary measure most separation monies received when you are laid off will not affect the payment of your EI benefits for the claims established on or after September 27, 2020 for one year.” This suggests that EI payments with respect to COVID-19 may be treated differently.  CERB - While the period for which employees could receive CERB is over, the government CERB FAQs indicate that “A severance payment does not impact an individual’s eligibility for the Canada Emergency Response Benefit.” This suggests that receiving a termination package will not disentitle an employee from their CERB. In a recent decision the Ontario Superior Court agreed - see Iriotakis v. Peninsula Employment Services Limited, 2021 ONSC 998. CRB - The CRB will likely be treated similarly to the CERB, and we expect that an employee will not have to repay the CRB if they also receive a termination package so long as they continue to maintain eligibility. An employee will be required to re-pay $0.50 of CRB for every dollar of net income earned above $38,000 in the calendar year.  Terminated employees who have been receiving income replacement benefits should get advice so that they can understand the impact of their termination packages on their entitlements to these benefits.Over the course of the past year, many people have had reductions in earnings and received some form of government income assistance – EI, CERB or Canada Recovery Benefit (CRB).

In some cases, employees who initially thought that their interruption or reduction in earnings was temporary have had their employment terminated. 

In almost all termination situations an employee will be entitled to some form of termination payment from the employer. Employees who are also receiving government income assistance may wonder how their government payments will be impacted by their termination packages. 

While not everything is crystal clear at this point, we have some thoughts!
Continue Reading Termination Payments and Repaying Government Benefits – EI, CERB and CRB

impact of covid-19 on terminations
Photo by kate.sade on Unsplash

The Covid-19 pandemic has changed our economy. In many industries, it has made it more difficult to find work and also more difficult for businesses to afford termination packages when letting employees go. The relevance of these facts to how courts will determine what terminated employees are entitled to has, so far, been unclear. 

Reasonable Notice

When an employment relationship is not governed by a written contract – with valid termination provisions – a terminated employee’s entitlements on termination without cause will be determined by the common law and what is called reasonable notice. 
Continue Reading The Impact of the Pandemic on Termination Packages