A termination letter is not just a formality. In Ontario, getting it wrong can expose your business to costly legal claims. This guide walks you through exactly what to include — and what to avoid.
Ontario’s Employment Standards Act (ESA) does not require a written letter, but giving one is strongly recommended. It creates a clear record, reduces confusion, and protects you if the employee later makes a claim. A well-written letter can significantly limit your legal exposure.
What to include in a termination letter
1. The employee’s name and last day of work
State clearly who is being let go and when their employment ends. Ambiguity here causes disputes. The last day should be specific — not “effective immediately” without a date.
2. Whether you are giving working notice or pay in lieu
You can ask the employee to work out their notice period, or you can pay them instead and have them leave right away. State clearly which one applies.
3. The amount of notice or termination pay
Under the ESA, employees are entitled to a minimum amount of notice based on how long they have worked for you — one week per year of service, up to eight weeks. Severance pay may also apply for longer-serving employees. State the exact amount you are providing.
4. What happens to their benefits
Explain when their benefits (health, dental, life insurance) will end. During a working notice period, benefits must continue. If you are paying in lieu of notice, your obligations may differ — get legal advice on this point.
5. Any vacation pay owing
Any unused vacation that has been earned must be paid out on termination. Include the amount or confirm it will be included in the final pay.
6. Return of company property
If the employee has a laptop, keys, access cards, or any other company items, state clearly what needs to be returned and by when.
7. Confidentiality reminder (if applicable)
If the employee signed a confidentiality or non-disclosure agreement, a brief reminder that those obligations continue after employment ends is good practice.
What to leave out of a termination letter
What you do not say is just as important as what you do say.
Do not list reasons
Unless terminating for cause, avoid giving reasons. Reasons can be used against you in court.
Do not make promises
Avoid vague language like “we may rehire you” unless you mean it and are prepared to honour it.
Do not get emotional
Keep the tone professional and factual. Apologetic or critical language can create legal complications.
Do not ask them to sign on the spot
If you include a release or severance agreement, the employee must have time to review it — and should be encouraged to get legal advice.
Termination for cause — a different situation
If you are terminating an employee for serious misconduct, the rules change. You may not owe notice or severance — but the bar for proving cause in Ontario is very high. A poorly worded letter in a for-cause situation can easily backfire. Always get legal advice before terminating for cause.
Important: The ESA sets only the minimum. Courts can — and often do — award employees significantly more than the ESA minimum under common law. A termination letter that only references ESA entitlements does not protect you from a larger claim.
The safest step you can take
Before you hand over any termination letter, have an employment lawyer review it. A small investment upfront can prevent a costly wrongful dismissal claim later. We are here employment lawyers regularly help employers draft letters that are clear, fair, and legally sound.
