The Canadian employment standards acts generally specify a minimum notice period before such terminations (the statutory notice period), and generally allow the employer to pay compensation to the employee instead of giving the employee notice (e.g., Ontario Employment Standards Act (OESA) s. 54-67). This compensation is usually called severance pay; it replaces advance notice of termination (OESA s. 61). In general, the severance pay must equal the salary and benefits that the employee would have earned if permitted to work until the end of the notice period. Courts interpret and defend prohibitions against employment agreements that reduce – “contract out” – termination benefits below these thresholds.
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