Is a Termination Letter Required in Ontario?
The Ontario Employment Standards Act, 2000 (ESA) does not expressly require a termination to be communicated in writing. A verbal dismissal can be legally effective. But every experienced HR professional in Ontario will tell you the same thing: always put it in writing, no exceptions.
Here is why the written record matters:
- Clarity on the effective date: The termination date determines when notice obligations begin, when the 7-day final pay deadline runs, and when benefits continuation ends.
- ESA notice requirement: Where an employer provides working notice (rather than pay in lieu), the ESA requires that notice be in writing.
- Evidence of what was offered: If a dispute arises about the termination package, the written letter is your documentation of what was communicated and when.
- Professionalism and risk management: A clear, measured letter reduces the chance of a contentious exit and supports the record you may need if the matter proceeds to a Ministry complaint or civil claim.
The question isn’t whether to write a termination letter. The question is how to write one that protects the business while treating the employee with respect.
What to Include in a Termination Letter
1. Identifying Information and Date
Address the letter to the specific employee by name. Include the date the letter is written, the employer’s full legal name, and relevant contact information. This seems basic, but the date on the letter matters – it may be referenced in calculating timelines.
2. The Termination Date
State clearly what date the employment is ending. This is the single most important element of the letter. The effective date determines:
- When the ESA 7-day final pay deadline begins to run
- The period over which benefits must be continued
- The end of the notice period if working notice is provided
Example phrasing: “Your employment with [Company Name] will end on [specific date].”
3. Whether Working Notice or Pay in Lieu
State clearly which option applies:
- Working notice: The employee continues working until the stated date, after which employment ends. All normal employment conditions continue.
- Pay in lieu: The employment ends immediately (or on a near-term date), and the employee receives a payment equivalent to what they would have earned during the notice period.
- Combination: Some notice is worked and the remainder is paid out.
4. The Termination Package
Set out clearly:
- The amount of termination pay (if pay in lieu) or the length of working notice
- Whether severance pay applies (triggers when employer has a $2.5M+ Ontario payroll and employee has 5+ years of service – up to 26 weeks at 1 week/year)
- Accrued and unpaid vacation pay (must be paid regardless of cause)
- The date or dates when final payments will be made
5. Benefits Continuation
The ESA requires that group benefits continue throughout the notice period. If you are paying in lieu of notice, you must either continue the benefits coverage or provide a cash equivalent of the premiums. The letter should state explicitly what will happen to the employee’s coverage and for how long.
6. Return of Company Property
List the company property the employee must return: access cards, laptops, mobile phones, vehicles, keys, or client files. Include a reasonable return deadline and the logistics.
7. Post-Employment Obligations
If the employee signed a confidentiality or non-solicitation agreement, the letter may include a brief reminder that those obligations remain in effect after employment ends. Note that non-compete clauses for most non-executive employees are void under the Working for Workers Act, 2021 – do not attempt to rely on them in the termination letter.
8. Record of Employment
You may confirm when the employee can expect their Record of Employment (ROE), which must be filed with Service Canada within 5 calendar days of the last pay period in which insurable earnings were received. This allows the employee to file for Employment Insurance if eligible.
What NOT to Include in a Termination Letter
What you leave out of a termination letter is just as important as what you put in. Many of the worst termination disputes are caused not by what the employer did, but by what they wrote.
| Avoid This | Why It’s Risky |
|---|---|
| Vague reasons for termination (“fit,” “performance issues,” “restructuring” without detail) | Creates grounds for challenging the stated reason, especially if it could relate to a Human Rights Code ground |
| Claiming just cause when you are not fully confident the threshold is met | Sets up a legal dispute, removes the fallback to without-cause, and can lead to aggravated damages |
| Any reference to a Human Rights Code ground (disability, pregnancy, age, race, religion) | Termination linked to a protected characteristic triggers a human rights complaint on top of any wrongful dismissal claim |
| Excessive apologies or expressions of regret | Creates ambiguity about whether the decision is final and can look like an admission of improper conduct |
| A promise of a positive reference in the letter | Creates a legally enforceable commitment – only include if you fully intend to follow through |
| An unreasonable deadline for signing a release | Courts scrutinize releases signed under pressure; allow reasonable time and independent legal review before presenting a release |
| Non-compete language (for non-executive employees) | Non-competes for non-executive employees are void under Ontario law – including them signals legal inexperience and may complicate the release |
The safest without-cause termination letter communicates three things: the employment is ending on this date, here is what the employee will receive, and here is how to return company property. That’s it. Less is more.
Template: Without Cause Termination Letter (Pay in Lieu of Notice)
The following template is provided as a starting point. It should be reviewed by your HR advisor or employment counsel before use and adapted to your specific circumstances, particularly regarding the amount of the package and common law exposure.
[Employee Full Name]
[Employee Address – if sending by mail]
Dear [Employee Name],
This letter confirms that your employment with [Company Name] is being terminated effective [Termination Date], without cause.
You will receive [X weeks] of pay in lieu of notice, representing [describe basis – e.g., “your minimum entitlement under the Employment Standards Act, 2000 based on your [X years] of service”]. This payment, totalling $[amount], will be paid as a lump sum by [payment date – within 7 days of termination date or next regular pay date, whichever is later].
[IF SEVERANCE APPLIES: You are also entitled to severance pay of $[amount], representing [X] weeks at your regular weekly wages. This will be paid [on the same date / in instalments in accordance with the ESA].]
Your accrued and unpaid vacation pay of $[amount] will be included in your final payment.
Your group benefits coverage [will continue through [date] / will end on [termination date], and you will receive $[amount] representing the cash equivalent of [X months] of premiums as part of your termination payment].
Please return all company property – including [list: laptop, access card, keys, etc.] – to [name and address/location] by [date].
Please note that your obligations under the [Confidentiality Agreement / Non-Solicitation Agreement] you signed on [date] continue in full force following the end of your employment.
Your Record of Employment will be filed with Service Canada within 5 calendar days of your last pay period.
If you have any questions regarding this letter or the details of your termination package, please contact [HR contact / designated manager] at [phone / email].
Yours sincerely,
[Authorized Signatory Name]
[Title]
[Company Name]
Template: Just Cause Termination Letter
A just cause letter is materially different. It states the reason for termination (because you are asserting the threshold has been met) and confirms that no termination pay is being provided on that basis. However, the bar for just cause under the ESA is higher than common law just cause – confirm with HR and legal counsel before using this template, particularly regarding whether ESA severance pay is still owed.
Important: The ESA just cause standard – “wilful misconduct, disobedience or wilful neglect of duty” under O.Reg. 288/01 – is higher than common law just cause. You may have sufficient grounds to dismiss for cause at common law while still owing ESA termination pay and severance pay. Always get HR or legal advice before withholding any ESA entitlements.
[Employee Full Name]
Dear [Employee Name],
This letter confirms that your employment with [Company Name] is being terminated for cause, effective immediately.
This decision follows a thorough investigation into [brief factual description of the misconduct – e.g., “allegations of [category], the findings of which were communicated to you on [date]”]. Based on the findings of that investigation, [Company Name] has determined that your conduct constitutes [just cause / wilful misconduct] warranting immediate termination.
As your employment is being terminated for cause, [you are not entitled to notice or pay in lieu of notice / you are not entitled to ESA termination pay – use correct language based on advice received].
You will receive payment for all wages earned through today’s date, as well as any accrued and unpaid vacation pay, totalling $[amount], which will be included in your final pay issued by [date].
Please return all company property – including [list items] – to [name and address] by [date].
Your Record of Employment will be filed with Service Canada within 5 calendar days.
[Authorized Signatory Name]
[Title]
[Company Name]
How to Deliver a Termination Letter
How you deliver the letter matters almost as much as what it says. Ontario courts pay attention to the manner of dismissal – a callous or humiliating termination process can attract additional damages under the principle of Wallace damages (good faith in the manner of dismissal).
| Method | When to Use | Best Practice |
|---|---|---|
| In-person meeting, followed by written letter | Almost always | Conduct the meeting first, then hand over the letter at the end or follow up by email |
| Video call for remote employees | Fully remote employees with no office location | Send the letter by email immediately after the call ends |
| Registered mail or courier | Employee is on leave or otherwise unavailable | Keep proof of delivery; send a copy simultaneously by email |
| Email only | As a supplementary confirmation only | Never the sole method – always precede with a real conversation |
| Text message | Never | Unprofessional, creates no formal record, and courts view it negatively |
Running the Termination Meeting
Keep the meeting short – 10 to 15 minutes. The purpose is to communicate a final decision, not to debate it. Have a witness present (typically an HR professional or a second manager), be direct and calm, and allow the employee to respond without turning it into a negotiation. Do not conduct the meeting in a public space, and avoid Fridays – the employee needs access to HR resources and support immediately after.
ESA Obligations at Termination: Quick Reference
| Obligation | ESA Requirement | Key Detail |
|---|---|---|
| Notice or termination pay | 1 week (3 mo-1 yr) up to 8 weeks (8+ yrs) | ESA is a floor – common law may require weeks or months more |
| Severance pay | 1 week/yr of service, up to 26 weeks | Only if $2.5M+ Ontario payroll AND employee has 5+ years |
| Final pay deadline | 7 days after termination date, or next regular pay date (whichever is later) | Includes vacation pay – withholding is an ESA violation |
| Vacation pay | All accrued and unpaid vacation pay in final cheque | Cannot be waived, even if the employee never took vacation |
| Benefits continuation | Continue through the full notice period | Cash equivalent of premiums is an acceptable substitute for pay-in-lieu situations |
| ROE filing | Within 5 calendar days of last pay period | Late ROE delays EI access and may trigger a Ministry complaint |
10 Common Termination Letter Mistakes Ontario Employers Make
| # | Mistake | Why It’s Costly | Risk |
|---|---|---|---|
| 1 | Claiming just cause without meeting the threshold | Converts a clean termination into a contested dispute; bad faith conduct attracts additional damages | ?? High |
| 2 | Letter references a Human Rights Code ground | Triggers a combined wrongful dismissal plus human rights complaint | ?? High |
| 3 | Relying on a termination clause that hasn’t been reviewed post-Waksdale | One unenforceable clause in the contract voids the entire termination section – full common law exposure | ?? High |
| 4 | Benefits cancelled on the day of termination | Benefits must continue through the notice period – early cancellation is an ESA violation and an additional damages exposure | ?? Medium |
| 5 | Final pay not received within 7 days | Ministry Order to Pay, administrative fines, and interest on the outstanding amount | ?? Medium |
| 6 | Vacation pay withheld from final payment | ESA s.41 requires payment of all accrued vacation pay – it cannot be forfeited regardless of reason for departure | ?? Medium |
| 7 | Letter is verbose about reasons for termination | Opens factual disputes about whether stated reasons are pretextual or discriminatory | ?? Medium |
| 8 | Release presented and signed on the spot | Courts scrutinize releases signed under immediate pressure; allow time and independent legal advice for enforceability | ?? Medium |
| 9 | ROE filed late or with wrong reason code | Delays the employee’s EI access and can trigger a Ministry complaint; the reason code affects EI eligibility | ?? Medium |
| 10 | Terminating during or because of a protected leave | ESA expressly protects employees during all 19+ ESA leaves – termination during a leave raises a reprisal presumption and likely triggers a Human Rights complaint | ?? High |
Frequently Asked Questions
Does Ontario law require a termination letter to be in writing?
The ESA does not expressly require a termination to be communicated in writing, but when an employer is providing working notice (rather than pay in lieu), that notice must be in writing. As a matter of best practice and risk management, all terminations should be confirmed with a written letter.
Can I terminate an employee without giving a reason in Ontario?
Yes. Without-cause terminations are lawful, and employers are not required to state a reason. In fact, for without-cause terminations, stating detailed reasons creates risk – any stated reason that could implicate a Human Rights Code ground, or that turns out to be inaccurate, invites additional claims. The letter should confirm the date, the package, and the property return process. That’s sufficient.
What is the ESA notice period in Ontario?
Under the ESA, employees are entitled to written notice or pay in lieu based on continuous service: under 3 months (none); 3 months to 1 year (1 week); 1-3 years (2 weeks); 3-4 years (3 weeks); 4-5 years (4 weeks); 5-6 years (5 weeks); 6-7 years (6 weeks); 7-8 years (7 weeks); 8 or more years (8 weeks). These are minimums – common law notice entitlements are typically far longer.
Do I have to pay severance pay in addition to termination pay in Ontario?
Severance pay is a distinct obligation from termination pay. It applies when two conditions are both met: the employer has a total Ontario payroll of $2.5 million or more, and the employee has 5 or more years of continuous service. When both apply, severance pay is 1 week per year of service (including partial years), up to 26 weeks – owed in addition to, not instead of, termination pay.
What should I do if the employee refuses to sign a release?
An employee is fully entitled to refuse. All amounts owed under the ESA – termination pay, severance pay, vacation pay – must be paid regardless of whether the employee signs a release. A release is only relevant above ESA minimums. If the employee refuses, seek HR or employment legal counsel on whether to proceed with a settlement offer or simply pay ESA entitlements only.
Can I email a termination letter?
You can follow up by email, but a termination should not be delivered by email alone. The conversation happens first – in person or by video call. The written letter follows immediately. Terminating by email without a prior conversation is poor practice that Ontario courts have noted unfavourably in assessing the manner of dismissal.
How long should I keep a copy of the termination letter?
The ESA requires employment records to be kept for 3 years, but legal best practice is to retain termination-related records for 6 years – the limitation period for civil claims in Ontario. Keep the letter, any severance calculation, the release (if signed), and any related correspondence in a secure file.