Employment Standards Act, Part 3

Written by: Gwyneth James, MBA CPA, CGA, Senior Partner

This month we finish our review of the rules found in the Employment Standards Act (ESA) which is managed and enforced by the Ontario Ministry of Labour. These rules provide direction with respect to paying your employees, but there are certain individuals and organizations that the ESA does not apply to. An example is companies that fall under federal employment law jurisdiction.

Examples of what is covered by the ESA are: minimum wage, overtime, tips and gratuities, hours of work, public holiday pay, vacation pay, leaves, and termination. (See Part I and II for the first 6 of these.)

There are many types of leaves allowed by the ESA – pregnancy, parental, family caregiver, reservist, etc. A leave is unpaid, but the employee’s position, seniority and benefits must continue through the period and an employer cannot penalize the employee in any way. In some cases, the employee will qualify for Employment Insurance benefits for part or all of the leave period.

The ESA requires employers to give either written notice, pay in lieu of notice or a combination if they dismiss an employee after 3 months without cause. These notice periods do not apply if there is a well-documented cause for the termination.

The amount of notice or termination pay depends on how long the employee has been employed. The lump sum payment of termination pay must be treated like any other payment of wages with vacation pay applied and payroll deductions withheld.

Severance pay is separate and in addition to termination pay, but only applies when an employee has worked for 5 or more years for an employer with a payroll of $2.5 million or more. The amount paid also relates to the years of service.

As always, there are exceptions so checking the Special Rule Tool is wise.

Cody & James Chartered Professional Accountants