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ESA Minimums revisited

Back in June, we wrote a post about minimum entitlements under the Employment Standards Act (ESA). Lately I've heard a fair bit from people who have been terminated and aren't given their statutory minimum entitlements, to which they are entitled under the act. 

What is meant by Minimums?

As we wrote back in June, the minimums are guarantees set out by the Ontario legislature and protected under the ESA. There are some exceptions, which you can review visiting our June post. What I want to highlight today, is what exactly is included in these minimums.

For example, suppose you are an employee who earns a salary of $1000.00 a week (it's an easy number to work with for this example). You have worked at this job for 4 years.

In addition to that base salary, suppose you are entitled to health and dental benefits, pension contribution matching and a profit sharing bonus.

Under the ESA, upon termination you are entitled to either working notice, wherein you are told your last day of work will be 4 weeks from today (the minimum under ESA) or payment in lieu of notice. The ESA minimum would be equivalent to 4 weeks' compensation.

Now, if we are looking at working notice, you would simply continue to go to work for 4 weeks. You'd get all the benefits you would normally receive during this time. That means benefits, pension matching and any entitlements to profit sharing.

If we look at the other option, being payment in lieu of working notice, you would be entitled to, AT A MINIMUM, 4 weeks' compensation.

But wait - this is more than saying you are entitled to $4,000.00 before deductions. You are also entitled to a continuation of benefits. You are also entitled to any profit sharing bonus you would have otherwise been entitled to.

Employment Agreements:

The problem, and there definitely is one, is that even if you have an employment agreement or employment contract that spells out the termination agreement, the termination clause needs to be in harmony with the ESA.

That means that the termination needs to recognize the minimums, and the totality of compensation. For example, if you get paid $1000.00 a week plus all the perks above, and it's in writing, the termination clause needs to recognize that. If it doesn't, say - it just provides that it will pay your salary for X number of weeks, it is not in line with the ESA. This can render that provision/clause or even the total agreement void, and entitle the employee to common law damages above and beyond the contemplated compensation in the agreement.

It's important to make sure you understand your employment agreement at the start of the relationship, and to revisit it at the end. As an employer this is especially the case when considering the termination notice payment. As an employee this is important so that you know whether the compensation is proper. In either case, it is advisable to visit an employment lawyer to get advice.

Contracting Out

As I said in June, parties can't contract out of the statutory obligations. You just can't.
I'll finish with what I finished with then.

As an example,if you have an employment agreement or an employment contract, you can't have a termination clause that gives or could give less than the minimum notice.

Just the same way you couldn't contract to work for less than minimum wage. Imagine how many vulnerable employees would be harmed if they could be forced to work for less than the minimum wage, which is certainly not even a living wage today.

If you have an employment agreement with your employer or employee, it is critical that these sections be reviewed carefully. It is possible that you could end up voiding the contract or voiding the clause if it fails to contemplate this requirement.

Remember, everyone's situation is unique. The blogs posted on this site are informational. They are not intended to be taken as legal advice for your situation. It is always a good idea to seek professional legal advice before making any decisions related to your particular case.

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