The Secrets to Termination: How to Know Your Full Pay and Benefits After a Dismissal

Factors to Consider When Determining Entitlements on Termination

By Michael C. Kelly

In Ontario, legal entitlements for employees terminated without cause often extend far beyond a few weeks of base salary. While the Employment Standards Act, 2000 (ESA) sets a statutory floor of one to eight weeks of notice,^[1] common law entitlements, determined by decades of judicial decisions, are frequently much higher, often reaching 12 to 24 months. Courts follow the full compensation principle which means a proper termination package must account for the total value of all employment benefits you would have received, including: Health and dental coverage; pension contributions; vacation pay; car, cell phone; other miscellaneous allowances; stock options; and variable pay, such as commissions or bonuses.^[2]

A termination clause typically requires compliance with the minimum standards for notice and the continuation of benefit plan contributions to be considered legally valid. Unless your employment contract contains a valid and enforceable termination clause that limits your rights to the statutory minimums guaranteed by law, your employer is legally required to continue these benefits for the entire duration of the notice period.^[3]

To calculate exactly how many months of pay and benefits someone is owed, courts use the Bardal factors, named after the 1960 case Bardal v. Globe and Mail Ltd..^[4] These factors include:

• Character of Employment: Senior or specialized roles usually attract longer notice.
• Length of Service: Longer tenure is rewarded with more significant awards.
• Age at Dismissal: Older employees often receive more time because it is harder for them to find comparable work.
• Availability of Similar Employment: The state of the current job market and your specific industry are weighed heavily.

What Entitles an Employee to Additional Damages?

Calculating a termination package is rarely as simple as looking at a base salary. Instead, courts look at the total compensation you lost. When specific aggravating factors are present, then your total award for entitlements could grow significantly, depending on your personal circumstances.

• Variable Pay: One of the most complex areas of termination is calculating pay like commissions or bonuses for time you did not actually work. In Shelp v. GoSecure Inc., the Court confirmed that if there is no reliable evidence of exactly what you would have earned in the future, a fair estimate based on past performance must be used.^[5] For example, a Vice President was dismissed after only 10 months, but because his future commissions were unpredictable, the court calculated his average monthly commissions earned during those 10 months and multiplied that average by his 6-month notice period.^[6] This ensures that full compensation is not lost just because your income fluctuates.
• Constructive Dismissal: Constructive dismissal occurs when an employer does not technically fire you, but unilaterally makes a substantial change to your job terms, such as a significant pay cut or a total change in responsibilities. The law allows you to treat constructive dismissal as a termination and sue for full common law notice. In Alpert v. Les Carreaux Ramca Ltée, a manager was considered constructively dismissed after refusing a new compensation package that altered his bonus structure.^[7] The court awarded him nine months of notice, which included the value of his medical benefits and car allowance for that entire period, even though he had not personally spent money on medical bills.^[8]
• Inducement: If you were hired away or recruited from a secure job, a court may increase your notice period to compensate for that lost seniority.^[9] In Wallace v. United Grain Growers Ltd., an employer went to great lengths to convince a top salesman to leave a job he had held for 25 years, assuring him he would have a role until retirement.^[10] When he was fired years later, the Court confirmed that these initial inducements justified awarding him 24 months of notice, to reflect the security he was persuaded to abandon.
• Human Rights Violations: Under section 46.1 of the Ontario Human Rights Code, courts can award damages for injury to dignity, feelings and self-respect.^[11] In the case Wilson v. Solis Mexican Foods Inc., an employee fired while on medical leave for a back disability was awarded $20,000 in human rights damages in addition to her regular notice pay.^[12]

Essential Tips for Protecting Your Entitlements

1. Check for Enforceability: Many termination clauses that try to limit you to the ESA minimums are unenforceable under current Ontario law. If you are uncertain about the terms of your agreement, you should never sign a release before having your contract reviewed by a legal professional.
2. Document Your Job Search: Common law notice is subject to a duty to mitigate. This means that after termination, you must make reasonable efforts to find a new job. We recommend that you keep a detailed log of your search, as any income earned during the notice period may be deducted from your final award.
3. Do Not Settle for Less: There is no fixed formula for an employee’s entitlements to notice. As seen in Shelp, it is still possible for a short-term employee to recover a significant notice period based on their seniority and the seniority they gave up to join the firm such as by way of inducement.

Knowledge is Your Best Defence

Understanding how courts value benefits ensures you are not leaving money on the table. Whether you are calculating average commissions or pursuing human rights damages, the law is designed to ensure you are treated fairly. If you have questions about your termination package or wish to have your employment contract reviewed, contact Michael Kelly (mckelly@sorbaralaw.com) at SorbaraLAW today.