Despite reported COVID-19 cases being down in Ontario, many employers are facing the grim reality of how the pandemic has affected, and will affect, their business. Even with the government’s emergency wage subsidy program, employers may have to cut down on employee and payroll costs.
With many employees being permanently laid off or terminated without cause, the question becomes:
Does an Employee Receive More Severance Pay If Terminated During COVID-19?
Yes, but only if their employment contract does not have an enforceable termination clause. If an employment contract has a paragraph on what an employer will provide an employee upon a termination without cause (often called the “termination clause”), and the wording of the paragraph is not consistent with the Employment Standards Act (ESA), the termination clause will be considered unenforceable. Employees with unenforceable termination clauses (or with no termination clause at all) are entitled to notice of termination, or payment in lieu of notice, under the common law. The payment in lieu of notice of termination is often called “severance”, “severance pay”, or the “severance package”
This reference to severance should not be confused with Severance Pay under the ESA.
How Much More Severance/Notice?
Likely 1-3 more months of pay. All situations are unique. Because common law notice is supposed to reflect how long it will take a dismissed employee to find a similar job, the courts have recognized that market conditions will increase how much notice an employee will get.
Is Severance Owed Even After a Temporary Lay Off Becomes Permanent?
Yes. For employees who have been laid off since the start of COVID-19, their layoffs may become a permanent lay off or termination automatically. The Employment Standards Act provides that laid off employees who receive some benefits/pay during their layoff must be recalled back to work after 35 weeks. If they are not called back to work after 35 weeks, their employment will be deemed terminated. Even though employees may have received CERB/EI and no regular payments from their employer for 35 weeks, they are still entitled to a severance package as if they were never laid off in the first place.
Speak with an Employment Lawyer to Determine Severance
In conclusion, it is important for employees and employers to understand their rights about terminations and severance payments. Employment lawyers regularly review and interpret termination clauses and employment contracts.
If you require legal advice on a termination clause, severance package offer, or employment contract, please contact Jason Wong. Jason is a Toronto Employment Lawyer practicing exclusively employment, labour, and human rights law. You can contact Jason at jason@wongemploymentlaw.com or 647-242-5961.