Negotiating Maximum Termination Pay and Severance Pay

Often, people who lose their job assume that if they receive any termination pay, severance pay, or pay in lieu of notice then they must have been properly compensated for being fired. This is far from the case. There are many factors and considerations a person should be aware of when figuring out what their termination entitlements are and more often than not an employment lawyer can help them get what is fair.

Statutory Minimum Notice Periods VS Common Law Notice Periods

Upon being fired, an employee is entitled to receive either (1) working notice, or (2) pay-in-lieu of notice. Working notice is not unusual but more often than not an employee is unhappy about being fired and an employer is concerned that the employee may do something to hurt the employer’s business while working to the end of the notice period. For that reason, employers usually chooses to terminate the employee immediately and, provide pay in lieu of notice.

The Employment Standards Act contains only the minimum entitlements that employees must receive on termination. Likewise, the Canada Labour Code sets out the minimum notice periods and severance entitlements for federally regulated employees (i.e. banking and telecommunications). However, just like the minimum wage, most employees should get a lot more than the minimums.

Judge made law or otherwise the law made by the Courts is called the “common law”. It entitles most employees to “reasonable notice”. Reasonable notice is much greater than the statutory minimums. Employees default to getting common law reasonable notice, unless they have a written employment contract that says otherwise.

There is no set formula to calculate common law notice. Generally, it is accepted that the average short-term employee is owed three to six months of notice, a long-term employee in a senior position may be owed up to 24 months or more, and somewhere in the middle for the other lengths of employment. How senior the employee’s position is will also be a factor. For example, a vice president or manager may be entitled to higher pay in lieu of notice that an employee doing a low level job, even for the same length of time. The employee’s age and the availability of alternative employment are also factors the Courts consider.

You can learn more about ‘Reasonable Notice’ and what the appropriate length is for different employees in my earlier article on “How much notice/severance should I get after being fired?.”

Termination Clauses

A termination clause in an employment contract alters an employee’s entitlements to common law reasonable notice. While it could technically provide for more, more often than not, employers include termination clauses to limit what an employee would otherwise get after being fired. Termination clauses cannot limit entitlements to below the minimums.

Where there is a valid and enforceable termination clause, an employee would not be successful if they attempted to seek more in a wrongful dismissal action. Fortunately, the Courts are often persuaded to strike out termination provisions. There are a number of different reasons that a court might find a termination clause unenforceable, such as pressure being put on the employee at the time of signing of the contract or where the limits on the severance pay are less than the minimums. If the termination clause is successfully struck out common law notice applies.

An experienced employment lawyer can offer advice on options on how to deal with terminations — for example whether one should sue for wrongful dismissal or alternately file a claim for termination pay or severance pay with the Ministry of Labour. It should be noted that a person cannot do both – sue for wrongful dismissal and file a claim for termination or severance pay. Seeking legal advice on rights is recommended to make the right decision. An employment lawyer can also help ensure payments for common law notice are maximized either through court action or a negotiated settlement.

When are termination clauses unenforceable?

In Movati Athletic Group v Bergeron, an employee had worked for about 16 months before she was terminated without cause. Purporting to rely on the termination clause in her contract, the company gave her the minimum entitlements under Ontario’s Employment Standards Act, 2000 (ESA). The employee claimed damages for wrongful dismissal arguing that the termination clause in her employment contract was not clear enough to rebut the presumption that she was entitled to common law reasonable notice of termination.

The court found the termination clause not clear and as a result, the employee received three months’ pay in lieu of reasonable notice of termination instead of her statutory minimum entitlements. This case illustrates how important it is for employers to make all efforts to expertly craft termination clause wordings and how important it is for employees to have their employment contracts checked by a lawyer before deciding whether it is actually enforceable.

A court will not enforce a termination clause that excludes minimum statutory entitlements upon dismissal as set out in the ESA or Canada Labour Code. It is illegal for an employer to provide less than the minimum standards of the ESA or Code, even if the employee has voluntarily agreed to accept a lower amount. Additionally, a court will not enforce a termination clause if it has not been properly drafted. Poorly drafted clauses are very common and any ambiguity in the language in the termination clauses usually acts against the employer.

Termination Provisions must use the clearest possible language when trying to limit an employee’s rights upon termination. Failing to use explicit language leaves the door open for varying views and interpretations of intention and, therefore, the clause may be set aside by a court for ambiguity.  Courts resolve drafting ambiguities in favour of employees.

Laws on termination clauses continue to evolve. It is important to keep abreast of changes and consult with employment lawyers when employers are drafting clauses or when you, an employee, are terminated


Contact Justin W. Anisman

Contact Justin W. Anisman, the author of this blog, about any employment law related questions or issues you may be facing. Call 416-304-7005 or email him at janisman@btlegal.ca.

Justin W. Anisman is an Employment Lawyer at the Toronto law firm Brauti Thorning LLP. Justin advises both companies and individuals in all aspects of employment law including wrongful dismissal, human rights and discrimination.


The publications made on this website are provided and intended for general introductory information purposes only. They do not constitute legal or other professional advice, or an opinion of any kind. Speak to a professional before making decisions about your own particular circumstances.

Accommodating Mental Health Illness

Mental health illnesses affect approximately 20% of Canadian workers and cost the country billions of dollars. According to the Centre for Addiction and Mental Health and the Canadian Mental Health Association, at least 500,000 employees are unable to work due to mental health issues in any given week.

The ability to engage in meaningful, paid work is a basic human right for every person.

In this article, we will discuss how employers are required to respond promptly and effectively when employees declare or display mental health issues. This response is referred to as the duty to accommodate and we will outline why accommodation is necessary, forms of accommodation, how to identify the need for accommodation and some solutions organizations can apply to ensure duty to accommodate can be met.

Why is accommodation necessary?

The goal of any accommodation is to ensure that any employee who is able to work yet who is experiencing some form of mental health issue or addiction issue has been offered options to be able to continue to work in a modified manner. It is an employer’s obligation under the Human Rights Code to respond immediately and appropriately when employees experience mental health problems. Proper support must be put in place to manage performance and productivity issues.

What is considered accommodation?

Mental health issues and the way they manifest themselves vary greatly. As a result, accommodations must be developed and applied on a case-by-case basis. The employer does not have a duty to change working conditions fundamentally but the employer must accommodate the employee in a way that will ensure that the employee can work as long as it does not provide undue hardship to the employer.

The standard of undue hardship is a very high standard for an employer to meet and it often means they are required to go to extreme lengths and even expense to accommodate.

Accommodation may include job restructuring, job bundling, reassignment to other positions, or retraining for other positions.

Examples of Duty to Accommodate

  • Providing stress leave for a person suffering depression or anxiety
  • Allowing a flexible work schedule to accommodate psychiatric or therapy appointments
  • Providing a quiet work environment with opportunity to work from home
  • Time off with pay to attend treatment programs for drug or alcohol dependency

How do employers identify the need to accommodate?

Often employers are afraid of saying or doing the wrong thing, so they say nothing. This can lead to poor productivity, lower morale, and conflict in the work environment.  However, employers should be aware that employees could be reluctant to disclose mental health issues. Where behaviour in the workplace makes it apparent that the employee is having mental health issues, the employer cannot simply terminate an employee who is not performing his or her job.  For example, a worker may be found to be crying at his desk and not completing his work or being repeatedly absent from work. This creates a duty to inquire on the part of the employer who must give the employee an opportunity to explain

Stigma around mental health often makes it difficult to identify needs to accommodate. Sometimes employees are unable to accurately pinpoint their disability needs, which make it difficult for employers to determine if a duty to accommodate exists.  Depending on the situation, the failure to accommodate an employee’s mental illness may constitute discrimination and give rise to human rights complaints or employment law claims. Employers must ensure that requests for accommodation are adequately addressed to avoid such claims.

Accommodating a disabled employee can cause frustrations both on the part of the employer and employee. Often they are suspicious of each other and do not understand their respective rights and obligations. Additionally, the employees are very vulnerable – financially, physically, and/or psychologically which complicates situations and raises the stakes for Human Rights Code violations. Potential liabilities can be significant if taken to court. 

The court has emphasized that employers need to act with empathy. What constitutes reasonable measures to meet the duty to accommodate is a question of fact and will vary with the circumstances of the case. The onus is on the employer to establish that it could not accommodate the employee without “undue hardship”.

What if accommodating an employee is too difficult for an employer? What is Undue Hardship?

There are no formal criteria for determining undue hardship. The courts will consider the context, health and safety of the employee, the cost to the employer in providing accommodations, collective agreements, workplace policies and procedures, the inter-changeability of the employer’s workforce and facilities and the operational requirements of the employer’s workplace. 

There is a reasonable limit to how far an employer or service provider has to go to accommodate an employee’s needs. They can claim undue hardship as the reason why certain policies or practices need to stay in place, even though they may have a negative effect on the employee. Although company policies and procedures may be robust, the need to go beyond them to accommodate an employee does not necessarily constitute undue hardship. For that reason, each case requires a tailored approach.  Sufficient evidence is necessary to assess claims for undue hardship. 

Generally, it will be more difficult for a larger organization with a large workforce to establish undue hardship.  This is because the cost of an individual accommodation will be proportionately less and because there are more alternative work opportunities if required in the accommodation plan. Conversely, a small employer may not be reasonably able to bear the financial burden of accommodation or may not have other employees who can do the work that the disabled employee is unable to complete.  Accommodation in such a case would more easily amount to undue hardship, which relieves the employer of having to accommodate the disability.

The Jurisprudence

The case of Harden v The Ottawa Hospital illustrates some interesting points regarding the collaborative nature of the duty to accommodate process such as an employer’s obligation to offer acceptable levels of duty to accommodate, be responsible to diligently investigate accommodation and propose job options, as well as an employee’s obligation to actively participate in the accommodation process by promptly providing medical information, be truly committed to seeking work that accommodates restrictions and make sincere efforts to secure positions. The duty to accommodate process demands active participation on the part of both the employer and employee.

In this case, the employee has a mental health condition that prevented her from working in her regular job as a registered nurse providing bedside nursing in a critical-care hospital setting. In the end, the employee resigned despite the fact that a reasonable offer of temporary accommodated employment by the hospital was available. She firmly believed she was discriminated against because her employer did not find a permanent job, which met her substantial restrictions, and because the hospital did not offer her several years of salary in exchange for her resignation from employment. The employee felt the hospital owed her more than it was prepared to offer by following its standard process of accommodation. She was seeking a financial package in exchange for her resignation as part of the duty to accommodate.

Ultimately, this position demonstrates a misunderstanding of the duty to accommodate. The duty to accommodate mandates that the employer to carefully consideration the individuals situation and provide meaningful attempts to find appropriate accommodations. It does not dictate that employer needs to provide new jobs or offer any sort of “buy-outs”.

The court concluded that the employer had discharged its duty to accommodate the employee to the point of undue hardship and dismissed the application.

Finding Solutions

Employers must engage in creative problem solving when asked to accommodate a mental health issue. Insurance benefit plans must treat disabilities equally and workplace policies and procedures must be flexible and adaptable to those having a mental disability. 

Organizations need to make sure they openly address stereotypes and make their organizational cultures more responsive to people with psychosocial disabilities. Under the Code, organizations are obliged to ensure they offer an inclusive work environments that meets the needs of people with mental health disabilities and addictions – thus promoting full inclusion and participation. 

Employers are not required to:

  • Continue to employ persons who are unable to fulfil basic employment obligations over the foreseeable future;
  • Create completely new positions or provide employees with meaningless work where the employee is incapable of anything else;
  • Cater to any specific form of accommodation preferred by the employee

Employees are required to cooperate and accept reasonable alternatives when presented and to provide all information requested by employers about the disability.

In summary

The costs and impact of disability and illness are very high:

  • For workers it translates into loss of income and impacts on self, family, and social environments;
  • For employers it translates into increased insurance premiums, loss of productivity by trained workers, and increased recruitment costs;
  • For society it translates into costs of social programs for individuals who may otherwise be productive and active members of the workforce.

Offering appropriate accommodations (temporary or permanent) to employees due to illness, injury or disability is a win-win for both employers and employees and is what the law in Ontario requires.


Contact Justin W. Anisman

Contact Justin W. Anisman, the author of this blog, about any employment law related questions or issues you may be facing. Call 416-304-7005 or email him at janisman@btlegal.ca.

Justin W. Anisman is an Employment Lawyer at the Toronto law firm Brauti Thorning LLP. Justin advises both companies and individuals in all aspects of employment law including wrongful dismissal, human rights and discrimination.


The publications made on this website are provided and intended for general introductory information purposes only. They do not constitute legal or other professional advice, or an opinion of any kind. Speak to a professional before making decisions about your own particular circumstances.