By: Stephanie McDonald and Baljinder (Bal) Singh Tiwana
The tech industry moves fast, and companies often hire aggressively based on projected growth. To attract talent quickly to allow tech companies to build their teams, tech employers may emphasize promises of career advancement, better work-life balance, long-term stability, or exciting future opportunities to induce candidates to accept new roles.
But business priorities such as AI adoption and economic conditions can shift just as quickly. When they do, restructurings and mass layoffs often follow, sometimes only months after an employee joins the tech company.
Many employees will leave secure jobs, relocate, and/or reject competing offers in reliance on these broken promises, only to later discover that the new role did not provide the opportunity they expected.
When layoffs occur, employers may pressure employees to quickly accept low-ball severance offers, present them as non-negotiable, or create urgency to sign before employees fully understand their legal rights.
That is often the point where employees should pause and obtain legal advice before it’s too late.
An employer’s initial severance offer rarely reflects the employee’s full legal entitlements. In many cases, employees may be entitled to substantially more compensation than what the employer initially offers.
The Starting Point: Employment Standards Act
In Ontario, employers frequently attempt to limit terminated employees to their minimum entitlements required under the Employment Standards Act, 2000 (ESA).
For shorter-service employees, particularly those employed for less than one year, that may amount to as little as one week of pay.
However, employees may be entitled to substantially more compensation if the termination clause in the employment agreement is legally void and unenforceable.
Ontario courts have repeatedly struck down termination clauses that:
- violate ESA minimum standards
- use ambiguous or misleading language
Importantly, Ontario courts interpret termination provisions strictly and generally resolve ambiguity in favour of the employee.
Getting More Than the Minimum: Unenforceable Termination Clauses
If a termination clause in your contract is unenforceable, the employee is generally entitled to common law reasonable notice instead of ESA minimum entitlements. The difference can be substantial.
Common Law Reasonable Notice
At common law, courts assess termination entitlements using the bardal factors, including:
- the employee’s age
- length of service
- character of employment
- availability of comparable employment
No single factor is determinative. Courts assess the circumstances on a case-by-case basis.
Leaving Secure Employment Can Increase Entitlements
One factor that can materially increase reasonable notice is inducement.
If a tech company actively recruited an employee away from secure employment, particularly where the employee left a stable role to join a startup or rapidly growing company, courts may assess the termination differently.
Inducement may arise where an employer:
- persuaded or lured an employee away from stable employment
- emphasized long-term career opportunities
- recruited aggressively through recruiters or head-hunters
- represented that the role offered security, stability, or future growth
In some cases, courts may effectively treat the employee as having greater service than their short service would otherwise suggest, when assessing reasonable notice.
How Industry Volatility Can Affect Tech Workers
Widespread layoffs across the tech sector can make comparable employment significantly more difficult to obtain.
Courts may recognize that employees in specialized technical roles, particularly during weakened market conditions, face longer job searches and fewer comparable opportunities. That can increase reasonable notice entitlements, even for employees with relatively short service.
Do Not Assume the First Severance Offer Is Fair
Many terminated employees assume their employment agreement automatically limits them to ESA minimums. That is often not the case.
Many termination clauses are unenforceable. A short period of employment does not necessarily mean that you will only receive your minimum statutory entitlements under the ESA.
In Ontario, even employees with relatively short service, for example, eight months, could still be entitled to significant compensation depending on:
- the enforceability of the termination clause
- whether they were induced to leave secure employment
- the nature of their role
- the availability of comparable employment
Conclusion
If you were terminated from a tech role shortly after being hired, particularly following a restructuring, funding slowdown, or strategic shift, you may be entitled to substantially more compensation than your employer initially offers.
This is especially true where:
- your employment agreement contains an unenforceable termination clause
- you left secure employment to accept the role
- you worked in a specialized technical role
- current market conditions make comparable employment difficult to find
Employers often frame severance offers as final or non-negotiable. In many cases, they are neither.
Before signing a release, employees should understand the difference between ESA minimum entitlements and their common law reasonable notice rights under Ontario law.
Workplace Sage Legal can help you assess your severance package, review the enforceability of your employment agreement, and determine whether you may be entitled to additional compensation if you were induced to take the new role.
Follow us on our social media pages below:
Learn more about employment law through the articles below:
- AI Is Reshaping Tech Jobs—Don’t Let It Undermine Your Legal Rights
- Tech Layoffs in Ontario: Why Your Severance Offer May Be Significantly Undervalued
- Who is entitled to Reasonable Notice, and how is it calculated?
DISCLAIMER: This article/blog is provided for educational/informational purposes only. This blog does not constitute legal advice. Do not rely on any advice before speaking with a lawyer. This blog does not form a solicitor-client relationship.
