By: Stephanie McDonald and Baljinder (Bal) Singh Tiwana
When an employee is terminated in Ontario, employers often rely on vague explanations such as “restructuring” or “budgetary reasons.” This is rarely accidental. In most cases, it is a deliberate strategy aimed at reducing the employer’s legal exposure.
Providing detailed reasons for termination can expose employers to being sued. Vague, non-contentious reasons limits opportunities for challenge and helps avoid allegations of wrongful dismissal or discrimination. Litigation is costly, stressful, time-consuming, and unpredictable— which is why most employers want to avoid it.
Termination Without Cause In Ontario
Ontario law permits employers to terminate an employee without cause at any time, provided the termination is not discriminatory and does not breach the Human Rights Code, the Occupational Health and Safety Act, or the Employment Standards Act. In such cases, the employer is not required to provide reason(s) for the dismissal.
However, the employer must provide the employee with:
- Working notice of termination, or pay in lieu of notice;
- Severance pay; and
- Reasonable notice (inclusive of termination pay and severance)
Statutory Minimums vs. Common Law Entitlements
Employees terminated without cause are entitled to minimum statutory notice of the termination of their employment or pay in lieu of up to 8 weeks, severance pay of up to 26 weeks and benefits continuation for up to 8 weeks under the Employment Standards Act (ESA). These statutory entitlements represent the minimum, not the maximum, compensation potentially owed.
Where an employment contract does not contain a valid and enforceable termination clause or is silent about termination, employees are entitled to common law reasonable notice, which often provides significantly greater compensation compared to the ESA minimum.
How Common Law Reasonable Notice Is Determined
Common law reasonable notice is assessed on a case-by-case basis, using the Bardal factors, which include:
- Length of service
- Age of the employee
- Position and level of responsibility
- Availability of comparable employment, considering the employee’s experience, training, and qualifications
Courts assess these factors contextually. No single factor is determinative. Employees with long service, senior or specialized roles, or limited re-employment prospects, typically receive longer notice periods.
The Role of Termination Clauses
Common law notice applies unless the employment contract validly limits entitlements. To be enforceable, a termination clause, at a minimum, must comply with the ESA in all circumstances. If a clause violates, or has the potential to violate, ESA minimum standards, it will be unenforceable, and common law notice will apply. Likewise, ambiguous termination clauses will likely not be enforceable. There are many other reasons why a termination clause can be unenforceable, so make sure you speak with a lawyer before signing a full and final release.
Federally Regulated, Non-Unionized Employees
Different rules apply to federally regulated employees governed by the Canada Labour Code.
The Canada Labour Code’s unjust dismissal provisions generally protect non-unionized employees with at least 12 consecutive months of service. In these cases, employers must provide a clear and legitimate reason for termination. Vague or unsupported explanations are often insufficient.
As a result, federally regulated employers face a higher threshold when terminating employees and must typically demonstrate just cause or a bona fide operational reason supported by a fair process.
Do Not Assume the First Offer Is Fair: Know Your Rights Before You Sign
Employers frequently present termination packages as final, even when they offer only ESA minimums. Once an employee signs a full and final release, they give up the right to pursue additional compensation.
Before accepting any severance offer, employees should assess whether the package reflects their full legal entitlements under both statute and common law.
Conclusion
Termination without cause is common in Ontario, and employers often provide limited information by intention. While employers may not be required to give reasons, they are required to provide proper notice or compensation. The difference between ESA minimums and common law reasonable notice can be substantial, particularly for long-service, senior, or specialized employees.
Employment contracts, termination clauses, and the surrounding circumstances all matter. A clause that appears enforceable may not be. Once an employee accepts a severance package and signs a release, they usually lose the opportunity to seek additional compensation.
Workplace Sage Legal helps employees cut through the uncertainty and legal jargon. We assess termination packages, identify whether common law notice applies, and advise on whether an offer reflects your legal entitlements. Our focus is practical and strategic guidance—so employees can make informed decisions.
If your employer has terminated you or presented a severance offer, getting legal advice early can make a meaningful difference.
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Learn more about employment law through the articles below:
- What’s Wrongful Termination? Signs Your Dismissal May Be Illegal
- Who is entitled to Reasonable Notice, and how is it calculated?
- Understanding Termination Clauses
DISCLAIMER: This article/blog is provided for educational/informational purposes only. This blog does not constitute legal advice. Prior to relying on any aspect of this article, you should consult with a suitably qualified legal professional promptly in your relevant jurisdiction, to obtain advice tailored to your individual circumstances. This blog does not form a solicitor-client relationship.
