Being dismissed from a job can create immediate financial uncertainty. A person who has just lost their employment may suddenly have to deal with rent, mortgage payments, credit-card bills, family expenses and the search for another job. The situation becomes even more stressful when the former employer has not yet delivered the employee’s final wages.
That concern was recently raised in a discussion on Reddit’s LawBulletin community, where a worker described being fired and having an issue with receiving their final pay. The discussion can be found in the post titled “Fired last week and employer won’t pay final.”
Although an online post cannot establish the legal facts of an individual case, situations like this raise an important question for Ontario workers: When employment ends, when does an employer have to pay what the employee is owed?
The answer depends on the type of payment involved and the circumstances surrounding the end of employment.
Your Employment Ending Does Not Mean Your Earned Wages Disappear
One of the first things a terminated employee should understand is that losing a job and receiving outstanding wages are two different issues.
If an employee worked hours or earned salary before their employment ended, those earnings do not simply disappear because the employment relationship has been terminated. Ontario’s Employment Standards Act, 2000 establishes rules concerning when wages must be paid after employment ends.
Under Ontario’s employment standards legislation, an employer generally has to pay outstanding wages no later than the later of seven days after the employee’s employment ends or the employee’s next regular payday.
This means an employee who has just been dismissed should identify the applicable payment date rather than automatically assuming that the employer has an unlimited amount of time to issue the final wages.
The exact circumstances still matter, particularly where the employee is also claiming termination pay, severance pay or other compensation.
A Final Paycheque May Contain More Than Regular Wages
When people hear the phrase “final pay,” they often think only about the salary or hourly wages earned during their last few days of work.
In reality, the final financial obligations between an employer and employee can involve several different categories.
Depending on the circumstances, an employee may have questions about:
- unpaid regular wages;
- overtime;
- accrued vacation pay;
- commissions;
- eligible bonuses;
- termination pay;
- statutory severance pay; and
- other compensation provided under an employment agreement.
These categories should not automatically be treated as identical.
For example, an employee could receive all of their ordinary wages but still have a separate question about whether termination pay or severance is owed. Conversely, an employee could be entitled to earned wages even where there is a disagreement about whether they qualify for termination-related compensation.
This is why looking only at the amount deposited into a bank account may not provide the complete picture.
Vacation Pay Can Become Important After Termination
Vacation is another issue that employees sometimes overlook when reviewing their final payment.
An employee may have accumulated vacation pay that has not yet been paid when employment ends. Ontario’s employment standards rules contain provisions dealing with vacation pay and the payment of outstanding amounts after employment ends.
The calculation can become less straightforward where a worker has received different forms of compensation throughout their employment.
For example, someone who earns commissions or other variable compensation may need to examine their pay records and employment agreement carefully before determining whether the final amount is correct.
An employee should therefore review previous pay statements rather than relying solely on the final deposit.
Termination Pay Is a Separate Question
Another common source of confusion is the difference between earned wages and termination pay.
Earned wages relate to compensation for work that has already been performed. Termination pay, on the other hand, may arise because the employment was ended without the required statutory notice or pay in lieu of notice.
Ontario’s employment standards legislation generally provides qualifying employees with a minimum period of notice of termination or termination pay instead of notice, although there are exceptions. The required amount depends partly on the employee’s length of employment.
This means an employee who has not received their final pay should not necessarily stop their analysis at the question, “Did I receive my last week’s wages?”
A second question may be necessary:
Was I also entitled to termination pay or another form of compensation because my employment ended?
That question can require a closer review of the employment relationship.
What About Severance Pay?
Severance pay is another concept that is frequently confused with termination pay.
They are not simply two names for the same payment.
Ontario’s statutory severance-pay rules have their own eligibility requirements. Generally, statutory severance applies only to employees who meet particular conditions involving factors such as length of employment and the size or circumstances of the employer.
Consequently, an employee should not assume that every person who loses a job automatically receives statutory severance.
At the same time, the absence of statutory severance does not necessarily answer every question about compensation following dismissal. Employment contracts and common-law rights can create additional issues that may need individual legal analysis.
The Employment Contract Could Matter
A person’s employment contract can play a major role in determining what happens after termination.
Some employment agreements contain termination provisions that attempt to define the employer’s obligations when employment ends. The enforceability and wording of those provisions can become significant in a dismissal dispute.
This is particularly relevant when the amount involved is substantial.
An employee may initially believe that the employer only owes a relatively small final wage payment. After examining the employment agreement and circumstances of termination, however, additional questions may arise concerning termination pay, severance, bonuses, commissions or other compensation.
That does not mean every terminated employee has a claim beyond their statutory minimums. It means the documents and facts should be examined before reaching a conclusion.
What Should You Do If Your Former Employer Has Not Paid You?
The first step is usually to establish exactly what is missing.
Instead of sending an emotional message saying only, “You haven’t paid me,” it can be more useful to create a written record identifying the outstanding amounts.
An employee should consider gathering:
Pay stubs: Previous pay statements can help establish the employee’s normal compensation and identify outstanding amounts.
Employment agreement: The contract may contain important provisions concerning compensation and termination.
Termination letter: Any written notice explaining the end of employment should be preserved.
Timesheets: These can be particularly important for hourly employees.
Vacation records: Employees should determine whether unused vacation pay remains outstanding.
Commission or bonus records: Variable compensation can require additional documentation.
Bank statements: These can help confirm which payments were actually received.
Keeping these documents together can make it much easier to understand what happened.
Put the Request in Writing
If an employee believes money remains unpaid, communicating in writing can be useful.
A written request can ask the former employer or payroll department to confirm:
- the amount of final wages;
- the date the payment will be issued;
- outstanding vacation pay;
- any termination-related payment;
- the calculation used to determine the final amount; and
- whether any amount has been withheld and, if so, why.
A calm and specific request can create a clearer record than a series of informal phone calls.
It also gives the employer an opportunity to identify a payroll error if the problem was administrative rather than intentional.
What If the Employer Says the Employee Was Fired for Cause?
Employees should also understand that the reason given for termination can affect certain entitlements.
Ontario’s employment standards legislation contains circumstances in which an employee may not be entitled to statutory termination notice or termination pay. One example involves certain forms of wilful misconduct, disobedience or wilful neglect of duty that are not trivial.
However, questions about “cause” can be legally complicated.
An employer describing a termination as “for cause” does not mean every possible payment is automatically erased. Earned wages remain a separate issue, and the precise circumstances need to be examined.
There can also be a distinction between an employer’s position and what would ultimately be established under applicable employment law.
For that reason, employees facing a disputed termination may benefit from obtaining professional advice before assuming that the employer’s explanation settles the matter.
When Should You Speak With an Employment Lawyer?
Not every delayed payroll issue requires a lawyer.
If a payroll department acknowledges a simple administrative error and provides the missing wages promptly, the issue may be resolved without litigation.
The situation can be different when the employer refuses to pay, disputes the employee’s entitlement, relies on a termination clause, alleges cause, or when substantial severance or termination compensation is involved.
Ontario employment law can involve statutory minimums, contractual obligations and common-law principles. The interaction between those rules can be difficult to assess from a short online discussion.
For people seeking professional assistance, HTW Law provides information about employment-law matters in Ontario, including wrongful dismissal, severance, constructive dismissal, employment contracts and workplace disputes. The firm’s website also provides information about consultations and its employment-law services.
Reviewing resources from an established employment-law practice can be a useful starting point for someone trying to understand the terminology and potential issues involved in a dismissal.
Don’t Assume the Last Deposit Is the Full Story
The biggest mistake a recently terminated employee can make is assuming that the amount appearing in their bank account automatically represents everything they were owed.
A final payment should be reviewed against the employee’s records.
Ask:
Were all hours paid?
Was vacation pay included?
Were commissions or other earned amounts accounted for?
Was termination pay potentially required?
Could statutory severance apply?
Does the employment contract contain relevant termination language?
Was the employee’s compensation structure more complicated than ordinary salary or hourly wages?
The answers will differ from one employee to another.
The Reddit discussion that prompted this topic demonstrates why final pay disputes can become confusing very quickly. A person may know that they have been dismissed but may not know which payments are simply outstanding wages and which payments arise from the termination itself.
Understanding Your Rights Before Taking the Next Step
An employment dispute does not necessarily begin with a lawsuit. Often, the first stage is simply understanding what happened and identifying the amounts involved.
Employees can start by reviewing their employment agreement, pay records and termination documents. They can then compare the amounts received with the compensation they believe remains outstanding.
Ontario’s employment standards framework provides minimum employment protections, while contractual and other legal rights may also be relevant depending on the circumstances. The Ministry of Labour’s guidance explains the statutory rules surrounding payment of wages and termination of employment.
For a worker who has just lost a job, knowing the applicable deadlines and understanding the difference between wages, vacation pay, termination pay and severance can make the situation much easier to navigate.
Ultimately, the important point is simple: the end of employment does not automatically mean the end of an employee’s financial entitlements.
If a final payment appears to be missing or incomplete, the employee should identify exactly what was earned, check when payment was due, preserve the relevant documents and, where the dispute is significant or complicated, consider obtaining advice from an Ontario employment-law professional.