Termination Pay for Short Service Employees

by | Feb 15, 2022 | For Employees

When considering a job offer you need to carefully consider the terms of the termination clause that is included in the written job offer you receive.

 Employer Friendly Termination Clause in Job Offer

When interviewing for a job the employer rarely raises your rights on termination. Instead, the employer usually includes a termination clause in your written job offer. It is not uncommon for the employer to propose that you receive the notice of termination you are entitled to receive under the Employment Standards Act (the “ESA”), which means, among other things, you receive NO notice during the first three months of employment, one week notice between 3 months and 1 year service, and two weeks notice if you are terminated between 1 and 3 years service

In other words, under this kind of termination clause you are entitled to very little notice of termination if you are terminated in your first 3 years of service. The most notice of termination you are entitled to receive under the ESA is 8 weeks. 

This is often a problem because the recruitment process for many jobs often takes several weeks after a prospective employer expresses interest in you. As a result, the termination pay you receive does not cover the period of time that you are unemployed between jobs. 

No Termination Clause in Job Offer

One approach to this problem is to suggest that the termination clause be removed from the job offer. Once removed you are entitled to reasonable notice of termination which is extremely difficult to predict for short-service employees. It can range from a few weeks to six or more months. This uncertainty can lead to litigation. The legal costs associated with this litigation can and often does exceed the termination pay a judge orders an employer to pay the employee at trial.

One recent case shows this uncertainty. Mr. Flack, a 61 year old finance manager working in a car dealership earning over $ 150 000 a year was terminated after 9 months service just before COVID arrived. Mr. Flack’s lawyer argued he should receive pay in lieu of 8 months notice. The employer’s lawyer referred to several “similar” court cases with an average notice period of 2.24 months. I write “similar” because every case is different as the judge is required to consider, among other things, the employee’s position, age, length of service, and the availability of similar employment. In this case, the judge decided that 2 months notice was reasonable.

Employee Friendly Termination Clause in Job Offer

An alternative approach is to negotiate changes to the termination clause that benefit you. You may have more negotiating power than you think. Particularly if you currently have a job, or you have another job offer, or you have a very specialized skill set, or you are the employer’s preferred candidate. 

The lawyers at the MacLeod Law Firm can help you negotiate improvements to an employer’s initial job offer including a more employee friendly termination clause. These offers are rarely carved in stone.

 

For over 30 years, MacLeod Law Firm has been providing employees in Toronto,  Barrie and Collingwood with employment law advice and representation. Please call us at 647-204-8107 to arrange a call with one of our lawyers.

 

 

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

 

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