How Do I Write and Review an Employment Termination Letter in Ontario?

Before you start: confirm the letter is even the right tool

An Ontario termination letter is not a government filing, there is no fee and no form to submit to a regulator. It is a private document governed by the Employment Standards Act, 2000 (ESA) and, where one exists, the employee’s contract. Before drafting, an employer needs to know two things: how long the employee has been continuously employed, and whether the dismissal is being framed as “with cause” or “without cause.” Both determine what the letter must say and what it must pay.

Under ESA s.54, an employer may not terminate an employee who has been continuously employed for three months or more unless it gives written notice under s.57 or s.58 and lets that notice expire, or pays termination pay instead. That single rule shapes almost everything below.

Step 1: Determine the employee’s ESA notice entitlement

The statutory minimum notice period in Ontario runs from one to eight weeks, scaled to the employee’s length of service under ESA s.57. This is a floor, not a target: a contract or common-law obligation may require more, but never less. Before drafting a word of the letter, calculate this figure using the employee’s continuous service date, not their start date on the org chart if those differ (for example, after a corporate reorganization).

Step 2: Decide between working notice and termination pay

The employer can satisfy s.54 either by giving written notice and having the employee work through it, or by paying termination pay instead of notice. Termination pay is a lump sum equal to the employee’s regular wages for a regular work week, for each week of the notice period (ESA s.61), and it attracts vacation pay. If working notice is chosen, note that vacation time cannot be folded into that notice period unless the employee agrees to it after the notice is delivered (O Reg 288/01, s.7).

Step 3: Check whether a “just cause” exemption actually applies

An employee guilty of wilful misconduct, disobedience, or wilful neglect of duty that is not trivial and has not been condoned by the employer falls outside the notice and termination pay requirements (O Reg 288/01, s.2(1)3). This is a narrow exemption. If cause is being asserted in the letter, the underlying conduct needs to actually meet this bar, because if it does not, the employee is entitled to the same notice or pay as any other termination.

Step 4: Draft the letter’s mandatory elements

Ontario Regulation 288/01, s.4(1) sets out the delivery mechanics: the notice must be (a) given in writing, (b) addressed to the specific employee whose employment is ending, and (c) served personally or in accordance with ESA s.95 (which addresses alternate methods of service). A letter that is unaddressed, verbal, or delivered in a way that doesn’t meet s.95 does not satisfy the Act, regardless of what it says.

Within the body of the letter, state plainly that employment is ending and the effective date. As noted in Step 1, no reason for the termination is legally required, and many Ontario employers omit one entirely in without-cause situations to avoid language that could later be characterized as an allegation.

Step 5: Address pay, benefits, and the required wage statement

If working notice is given, the employer must not reduce the employee’s wage rate or alter any other term or condition of employment during that period, and must continue whatever contributions are needed to maintain the employee’s benefit plans (ESA s.60). If termination pay is given instead, that lump sum must also carry the benefit-continuation obligation and attract vacation pay (s.61).

Separately, ESA s.12.1 requires the employer to provide a written statement of the wages and vacation pay paid on termination, showing how those amounts were calculated, on or before the date wages are otherwise due under s.11(5). This statement is a distinct document from the termination letter itself, though some employers combine the two.

Step 6: Check for severance pay eligibility

Severance pay under ESA s.64 is a separate entitlement from termination pay, and it generally applies where the employee has five or more years of service and the employer’s payroll is $2.5 million or more. Where it applies, it is calculated and paid in addition to the notice or termination pay addressed above, not instead of it.

Step 7: Review any contract termination clause before relying on it

If the employee’s contract contains a termination clause, that clause needs a fresh legal review before the letter is drafted, not just at the time the contract was signed. The Supreme Court of Canada in Machtinger v. HOJ Industries held that a termination clause providing less than the ESA minimum is null and void for all purposes, and cannot even be used as evidence of what the parties intended. Ontario appellate authority (Rahman v. Cannon Design Architecture, cited in Dufault v. The Corporation of the Township of Ignace) goes further: if any one termination provision in the contract violates the ESA, the entire termination provision, including a “for cause” clause the letter might otherwise rely on, becomes unenforceable. A clause that looked fine when signed years ago may no longer hold up.

Step 8: Review the tone and manner of delivery

Beyond the ESA’s technical requirements, the manner of dismissal carries independent legal weight. The Supreme Court in Wallace v. United Grain Growers held that employers must be candid, reasonable, honest, and forthright when dismissing an employee, and must not act in bad faith, for example by being untruthful, misleading, or unduly insensitive; breaching this can increase the damages an employer owes. At the same time, Honda Canada Inc. v. Keays confirms that ordinary hurt feelings from being terminated are not, on their own, compensable; it is bad-faith conduct in the manner of dismissal, not the fact of termination itself, that creates additional exposure. A termination letter should be reviewed with this distinction in mind: factual, professional, and free of anything that could later be characterized as misleading or gratuitously harsh.

What common-law notice adds beyond the ESA floor

Where an employee’s entitlement is not capped by an enforceable contract, courts assessing “reasonable notice” under the common law weigh the Bardal factors from Bardal v. Globe & Mail Ltd: the character of the employment, the length of service, the age of the employee, and the availability of similar employment. This case-by-case common-law figure is frequently higher than the ESA minimum, which is why Step 7’s review of the contract’s termination clause matters so much: if that clause is void, the employer may owe common-law notice instead of the lower ESA floor the letter assumed.