Once upon a time there was a roofing contractor. He did not have any written Employment Contracts in place and had a manager that he wasn’t very happy with.
He knew it was difficult to terminate an Employee with cause, so he wondered how much termination pay he would have to pay in order to terminate the Employee without cause.
Someone told him that the Employment Standards Act requires 1 week of pay for every year of employment up to 8 years.
He figured that he could afford that, so he terminated the manager without cause and provided him with the 8 weeks of pay (the manager had 17 years of service with the contractor).
Without a written Employment Contract containing an enforceable termination provision, an employee cannot be limited to the ESA minimum upon termination. Instead, the employee will be entitled to common law reasonable notice.
Common law reasonable notice is determined based on a combination of factors including age, length of employment, position in the company, and availability of similar employment.
In this case, the manager was 57 years old and had been with the company for 17 years. His annual salary was $57,000.
Settlement ended up at 18 months pay – $85,500.
Some common law notice periods can go as high as 24 months pay.
That is just one of the reasons you need to have an enforceable employment contract.
I can help with that.
Business Development Manager Lesley Moll Business Development Manager
123 Front Street West, Suite 200, Toronto, Ontario, M5J 2M2, Canada