Termination Notice Provisions

[Mali Singh]

#97248

Forum: Private

(ON, Canada)

Hi there,
We have have accumulated a few different offer letter templates over the years listing different termination compensation for staff (all above the employment standard minimums) hence we have quite a variance without much logic behind who gets what.

Most recently, the latest template created capped termination compensation at a max of 10 weeks of annual salary- which is fine for new staff coming in. However, for any previous staff who changed roles internally, are we able to reduce the termination provision for them if their previous offer listed it as 20 weeks of annual salary for example? What if they refuse to sign this, what is the recourse? Is there a best practice to determine the weeks provided or is it purely an employer decision on what to list beyond the employer standard minimums? Lastly, if we want to make this consistent for all staff, would the contracts with higher provisions need to be grandfathered in or are we able to simply issue a new contract (if a role isn’t changing for example)?

[Haley O’Halloran]

#97249

This is a very common situation in Ontario when organizations evolve their employment templates over time but haven’t standardized past agreements. There are several legal and practical considerations here under the Employment Standards Act, 2000 (ESA) and common law.

Here’s a structured breakdown:

1. Reducing Termination Provisions for Existing Employees

Under Ontario law, you cannot unilaterally reduce termination entitlements that are part of an employee’s existing contract, even if they move into a new role internally. A termination clause that provides (e.g.) 20 weeks’ pay forms part of the contractual terms. To reduce that entitlement, you would need to give the employee “consideration” (something of value beyond continued employment, such as a signing bonus, salary increase, promotion, or extra vacation).

If you simply issue a new contract with a lower termination cap (e.g., 10 weeks), it will likely not be enforceable unless proper consideration is given and the employee voluntarily signs. If they refuse to sign, you cannot force the change, and their original contractual entitlements remain in effect.

Important: Even if you introduce a new template, the older contract continues to govern unless the employee signs a valid new agreement with fresh consideration.

2. Internal Role Changes: Special Consideration

If an employee moves into a genuinely new role — especially with significant changes in responsibilities, compensation, or seniority — you can make signing a new contract a condition of accepting the new role. However:

The new agreement must be presented before the role change takes effect.

The offer must clearly state that accepting the new role is contingent on signing the new contract.

The employee must have a reasonable opportunity to review and seek advice.

If the internal role change is minor or mostly a title change, courts often see this as a continuation of employment, meaning the old termination clause still applies.

3. Determining Termination Pay Above ESA Minimums

Beyond ESA minimums, employers have discretion to set enhanced contractual termination entitlements. There’s no legal “formula” for this. That said, best practices for determining standardized termination pay often include:

Seniority or years of service (e.g., 1 week per year of service, capped at X weeks).

Position level (e.g., executives vs. front-line staff).

Market comparables in your sector.

Budget predictability — clear caps (like 10 weeks) are increasingly common to manage liability exposure.

Once you standardize, consistency is key to avoid claims of unequal treatment.

4. Grandfathering vs. Re-Issuing Contracts

If you want to standardize termination provisions, you have two options:

Option A: Grandfather existing contracts

Leave older contracts intact with their more generous provisions.

Apply the new standard to new hires and any future internal promotions where a new contract is signed.
Low legal risk, but creates internal inequities for a time.

Option B: Reissue contracts to existing employees

You can offer new standardized contracts to all employees, but you must provide consideration for those whose termination terms are being reduced.

If they refuse to sign, their old contract remains valid.

If you proceed without consideration, the clause can be challenged and struck down later.

If the role is not changing, you cannot simply issue a new contract with lower termination terms and expect it to override the old one.

5. If an Employee Refuses to Sign

If someone refuses to sign a contract with reduced termination entitlements:

Their existing contract remains in force.

You cannot discipline or terminate them solely for refusing to sign.

For future promotions, you could make signing the new contract a condition of accepting the new role, as long as that’s handled properly.

Practical Next Steps
-Audit current contracts to identify variations in termination clauses.
-Develop a standardized policy (e.g., 1 week per year of service, capped at 10 weeks).
-For future hires and promotions, use the new template consistently.
-For existing employees with more generous provisions, either:
-Grandfather their existing terms; or
-Offer a new contract with consideration if you want to align their entitlements.
-Consider consulting employment counsel to ensure the language of the new termination clause is ESA-compliant and enforceable (many clauses are struck down due to wording errors).

I hope this helps!
-HRInsider Staff

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