LET’S TALK NUMBERS

Tahir Khorasanee, LL.M. Senior Associate, Steinbergs LLP I am often asked about the amount of notice or severance employees are entitled to upon termination. Answering that question requires me to first review the employment agreement. Many times, there is an employment agreement, but it contains a termination provision that has been struck down by the courts and is therefore unenforceable. Most of the time, there is no written employment agreement at all. In both instances, the employee's entitlements upon termination are based on several factors, including age, salary, position, and length of service. There are often other considerations as well, which I will discuss in subsequent columns on a biweekly basis. As an example, Nemirovski was employed with Socast Inc for 19 months. He was a project manager and was awarded 19 months by the courts because Socast refused to provide Nemirovski with a reference letter, and his employment agreement had an onerous non-competition clause. In the absence of an enforceable termination provision that limits employees' entitlements to the minimums outlined in the Employment Standards Act, employees are entitled to anywhere between 2 to 30 months' notice or pay in lieu thereof. In some instances, such as with construction workers or those in seasonal industries, there may be no obligations upon termination. Failure to consult a lawyer initially to determine appropriate employee obligations upon termination results in wrongful dismissal claims, increasing costs significantly. The same holds true for employees who are often provided with a termination package paying only the Employment Standards Act minimums, which do not reflect the employee's actual entitlements. For many small businesses, having to pay 2 to 30 months' notice is a significant cost. These costs can easily be avoided if businesses consult a lawyer and conduct a human resource audit, reviewing existing employment agreements and policies, identifying deficiencies, and recommending strategies to limit liabilities. This involves an upfront cost but saves tens of thousands of dollars in the short term and even more in the long term. Employment agreements drafted after the COVID-19 pandemic prioritize reducing costs and providing businesses with flexibility. Many businesses went under during the COVID-19 pandemic, and those that survived did so because they sought legal advice early on. Businesses with employment contracts with an enforceable termination provision limiting the employee to the Employment Standards Act minimum can provide as little as 1 weeks’ notice, as opposed to 2 months to 30 months. In my next column, I will be answering employment law questions from both employees and employers. If you want me to answer your questions, email me at tkhorasanee@steinbergsllp.com. Tahir Khorasanee is currently the Vice President and the incoming president of the Employment Lawyers Association of Ontario. He is a Senior Associate at Steinbergs LLP. Tahir Khorasanee, LL.M. Senior Associate Steinbergs LLP