In Ontario, when an employer ends employment of someone continuously employed for three months, they must provide written notice of termination, termination pay, or a combination. You cannot simply fire someone and walk away—the law requires proper compensation.
Firing an employee in Ontario requires careful planning and compliance with employment law. Mistakes during termination can lead to wrongful dismissal claims costing tens of thousands of dollars. This guide explains how to fire an employee legally in Ontario while minimizing risk to your business.
Two Types of Termination
Termination Without Cause Under Ontario law, employers can legally terminate a non-unionized employee without giving a reason, provided the employee has at least three months of continuous service. This is the most common type of termination. You don’t need to prove the employee did anything wrong—you just need to pay them properly.
Termination With Cause Firing for cause means terminating without severance due to serious misconduct. The primary exceptions to severance requirements are where the employee commits wilful misconduct, wilful neglect of duty, or disobedience that was not condoned by the employer. Examples include theft, fraud, or violence. However, cause is extremely difficult to prove—poor performance alone doesn’t qualify.
Step 1: Assess Whether You Have Just Cause
Most employers think they have cause when they don’t. Just cause requires serious misconduct that fundamentally breaches the employment relationship. Before claiming cause, ask:
- Is this wilful misconduct or just poor performance?
- Do I have clear documentation of the behaviour?
- Did I warn the employee and give them a chance to improve?
- Have I condoned (allowed) similar behaviour in the past?
If you can’t answer yes to all these questions, proceed with termination without cause. Attempting to fire for cause without proper grounds makes wrongful dismissal claims much more expensive.
Step 2: Calculate What You Owe
This is where most employers make costly mistakes.
ESA Minimum Requirements
Under the Ontario Employment Standards Act, 2000, an employer is legally required to provide an employee with at least 1 week of prior notice of termination, or alternatively, 1 week of termination pay for each year of service. The maximum under ESA is 8 weeks.
ESA Notice Periods:
- 3 months to 1 year: 1 week
- 1 year: 1 week
- 3 years: 3 weeks
- 5 years: 5 weeks
- 8+ years: 8 weeks (maximum)
Severance Pay (ESA)
Separate from termination pay, employees with 3+ months of continuous service are entitled to notice or pay in lieu; this includes termination pay. Severance pay applies if your payroll is $2.5 million or more and the employee has 5+ years of service. The formula is one week’s pay per year of service, up to 26 weeks maximum.
Common Law Entitlements (The Real Number)
Here’s the critical point: In order for an employer to legally limit an employee’s severance package entitlements to only statutory minimums, the employee and employer must have signed a valid employment contract with a termination clause making this clear.
Without a valid contract limiting severance, employees are entitled to “reasonable notice” under common law—typically much more than ESA minimums. Common law considers:
- Length of service
- Age
- Position/seniority
- Ability to find comparable work
An Ontario employee with 12 years of service at a mid-sized company was let go without cause due to restructuring. Their employer offered 8 weeks of termination pay, citing ESA minimums. Under common law, the employee was entitled to approximately 14 months of pay.
Common law ranges:
- 5 years service: 4-8 months
- 10 years service: 8-15 months
- 15 years service: 12-20 months
- 20+ years service: 15-24 months
Step 3: Review Your Employment Contract
Pull out the employee’s employment contract and look for the termination clause. Does it:
- Clearly limit severance to ESA minimums?
- Comply with current ESA requirements?
- Avoid illegal language that courts reject?
Courts have repeatedly struck down termination clauses that fail to strictly comply with the ESA. Even minor drafting errors can invalidate contractual limits.
If your contract has problems or doesn’t exist, you’re stuck paying common law severance. This is why getting contracts right from day one matters.
Step 4: Check for Discrimination or Reprisal
Employers cannot terminate you for discriminatory reasons, which is illegal under the Ontario Human Rights Code. Before firing, ensure the termination isn’t connected to:
- Protected grounds (race, gender, age, disability, religion, etc.)
- Recent complaints about harassment or discrimination
- Protected leaves (pregnancy, parental, medical)
- Workplace injury claims
- Asserting ESA rights
A 2017 Ontario Human Rights Commission survey found that 45% of individuals who experienced discrimination at work cited those experiences, with common grounds being race (63%), sexual orientation (34%), and disability (25%).
Terminating someone shortly after they take medical leave or file a complaint creates significant legal risk, even if you claim other reasons.
Step 5: Prepare Your Termination Package
Draft a complete severance offer including:
Financial Components:
- Termination pay or working notice
- Severance pay (if applicable)
- Accrued vacation pay
- Outstanding bonuses or commissions
- Pension contributions during notice period
Benefits Continuation:
- Health and dental benefits during notice period
- Life insurance coverage
- Other applicable benefits
Release and Conditions:
- Full and final release of claims
- Return of company property
- Confidentiality obligations
- Non-solicitation provisions (if enforceable)
Written Termination Letter: Your letter should state:
- Termination is without cause
- Effective termination date
- Severance offer details
- Benefits continuation period
- Deadline to accept offer (reasonable timeframe)
- Return of property requirements
Avoid:
- Giving reasons for termination
- Criticizing the employee’s performance
- Suggesting they did anything wrong
Step 6: Plan the Termination Meeting
Logistics:
- Schedule for early in the week, early in the day
- Choose a private, neutral location
- Have a witness present (HR or another manager)
- Prepare to escort employee out if necessary
- Disable system access immediately after meeting
What to Say: Keep it brief and professional:
“We’ve made the difficult decision to end your employment with the company, effective today. This is not a decision about your performance—it’s a business decision. Here’s your termination letter outlining your severance package and next steps. We’ll need you to return [company property] before you leave today.”
What NOT to Say:
- Don’t apologize excessively
- Don’t debate the decision
- Don’t discuss other employees
- Don’t provide detailed reasons
- Don’t make promises not in writing
Step 7: Conduct the Termination Meeting
Severance Pay (ESA)
During the meeting:
- Deliver the news clearly and directly
- Hand them the written termination letter
- Explain the severance package briefly
- Answer basic questions (refer complex ones to HR/lawyer)
- Collect company property
- Explain benefits continuation
- Provide information about final pay
- Escort them out respectfully
Keep the meeting short—15-20 minutes maximum.
Step 8: Handle Post-Termination
Immediate Actions:
- Disable email and system access
- Collect keys, laptop, phone, access cards
- Notify relevant staff (on need-to-know basis)
- Issue final pay by next regular pay date
- Continue benefits as promised
Record of Employment: Once a Canadian employee is terminated, employers need to issue the final salary payment by the next pay date, send a Record of Employment (ROE) to the employee. Submit the ROE to Service Canada within 5 days of the employee’s last day.
If Employee Rejects Offer: Severance offers are often negotiable. Many employees consult lawyers who advise them they’re entitled to more. Be prepared to negotiate. Having a lawyer negotiate on your behalf is often cost-effective.
Common Mistakes That Lead to Wrongful Dismissal Claims
Offering only ESA minimums without a contract: This is the #1 mistake. Without a valid termination clause, you owe common law severance—often 10-20 months for long-service employees, not 8 weeks.
Attempting just cause without proper evidence: Employers sometimes improperly allege cause to avoid paying compensation, which can increase liability. If your cause claim fails, you’ll pay common law severance plus additional damages.
Firing during or shortly after protected leave: Terminating someone on medical leave, pregnancy leave, or after they complained about discrimination creates presumption of illegal conduct.
Poorly worded termination letters: Letters that suggest cause, criticize performance, or contain threats give employees ammunition for claims.
Not getting legal advice beforehand: The cost of a lawyer reviewing your termination plan is far less than defending a wrongful dismissal claim.
When to Get Legal Help
Consult an employment lawyer before firing if:
- Employee has 5+ years of service
- Employee is senior management or executive
- You’re considering termination for cause
- Employee recently complained about discrimination or harassment
- Employee is on or recently returned from protected leave
- You don’t have a valid employment contract
- You’re laying off multiple employees
Many employees are entitled to significantly more than their employer initially offers. Having legal advice helps you offer enough to avoid litigation while not overpaying.
The Bottom Line
Firing an employee legally in Ontario requires:
- Understanding the difference between with cause and without cause
- Calculating proper severance (ESA minimums vs common law)
- Reviewing employment contracts for valid termination clauses
- Checking for discrimination or reprisal risks
- Preparing complete severance packages
- Conducting professional termination meetings
- Handling post-termination obligations properly
Most wrongful dismissal claims happen because employers offer inadequate severance or attempt to fire for cause without proper grounds. Getting legal advice before terminating saves money and reduces risk.
If you’re planning to fire an employee, contact an employment lawyer to review your situation and ensure you’re doing it correctly.
