Here’s a fun legal question about the ESA.
Employees dismissed in Canada are entitled to two types of notice of termination:
(1) minimum notice of termination defined in employment standards legislation;
(2) contractual notice of termination.
A contract might merge the two entitlements into one. If a contract term says that the amount of notice required to be given is the same as required by employment standards legislation (“the employer can terminate this contract by providing the employee with notice equal to the amount required by the ESA”), then the employer only has to provide the ESA amount of notice. The contractual notice and the ESA notice become one and the same.
Alternatively, a contract might include an express term requiring a greater amount of notice than the ESA minimum (“the employer can terminate this contract with 10 week’s notice”) in which case the employer will satisfy its ESA and contractual notice requirements by providing 10 weeks’ notice.
However, if the contract says nothing about notice of termination or requires less notice than required by the ESA, then the employer has to provide the employee with “reasonable notice”, which is an amount tabulated using a variety of criteria, the most important of which is length of service. “Reasonable notice” is almost always more than ESA minimum notice, often considerably more. For example, a long service employee might be entitled to only 8 weeks’ ESA notice, but 18 months’ “reasonable notice”. In that case, the employer is legally (contractually) required to provide 18 month’s notice, not just the lesser 8 weeks notice.
All of that is by way of review. Now here is my question for the day.
The ESA in Ontario requires that a variety of information be provided by the employer to the employee at the point of termination. The section is 12.1. Look what is says:
12.1 On or before the day on which the employer is required to pay wages under subsection 11 (5), the employer shall provide the employee with a written statement setting out,
(a) the gross amount of any termination pay or severance pay being paid to the employee;
(b) the gross amount of any vacation pay being paid to the employee;
(c) unless the information is provided to the employee in some other manner, how the amounts referred to in clauses (a) and (b) were calculated;
(d) the pay period for which any wages other than wages described in clauses (a) or (b) are being paid;
(e) the wage rate, if there is one;
(f) the gross amount of any wages referred to in clause (d) and, unless the information is provided to the employee in some other manner, how that amount was calculated;
(g) the amount and purpose of each deduction from wages;
(h) any amount with respect to room or board that is deemed to have been paid to the employee under subsection 23 (2); and
(i) the net amount of wages being paid to the employee.
So the employer has to tell the employee the amount of “wages” she is entitled to at the point of termination in addition to the amounts to be provided by way of ESA termination and severance pay.
What are “wages”? The answer to that is found in Section 1. “Wages” mean any “monetary remuneration payable by an employer to an employee under the terms of an employment contract, oral or written, express or implied.” The notice of termination clause in an employment contract tells the parties the amount of wages that need to be paid to an employee before they can be terminated. The requirement to pay wages through the period of “reasonable notice” is an implied contract term.
Reading all of this together, doesn’t this mean that an employer is required to provide a statement to employees at the point of termination explaining the amount of contractual notice (including ‘reasonable notice’ if that is the contract requirement) being provided to the employee, and how that amount was calculated?
If so, then the statement would require the employer to include an assessment of how much ‘reasonable notice’ is required to dismiss the employee, given the employees’ job, length of service, age, and skills (the Bardol factors).
For example, remember the Di Tamaso decision? The employer claimed that 12 month’s notice was appropriate for an employee who had 33 years’ service. The Court ultimately ruled that the notice period was 22 months. At the time of dismissal, the employer’s statement of termination might have said something like this:
Termination Pay (ESA): Wage Rate x 8 weeks at regular hours
Wages Owed during Contractual Notice Period: Wage Rate x 12 months’ at regular hours. For non-managerial, low-skilled employee with 33 years’ service, the maximum amount of notice courts order is 12 months.
That would actually be a useful process, since it would force the employer to turn its mind to assessing contractual notice according to legal principles, and would inform the employee of their entitlement to receive greater notice than just ESA minimum notice. Employers are legally required to estimate the ‘reasonable notice’ period anyhow, so all this is saying is tell the employee how you did that estimation.
But I don’t think many (any?) employers interpret the ESA as requiring a statement of how “reasonable notice” periods were calculated.
What do you think? Does the ESA requirement for employers to provide a statement explaining how all outstanding “wages” due at the point of dismissal were calculated include a requirement to explain how “reasonable notice” was calculated by the employer?
Do you think that this would be a good idea if in fact most employers do not presently do this?