In Ontario, employers owe vacation pay on employee wages. Wages are defined in section 1 of the Employment Standards Act to include "any payment required to be made by an employer to an employee." Here is where it gets tricky. In Ontario, the employment standards may require two separate types of payments to an employee who is terminated without cause.
When I speak at conferences, I am often asked the following question: “Is severance pay required when an employee is terminated?”
Before this question can be answered, we have to first confront the difficulty that some payroll terms traditionally used to describe both termination, as well as any payments resulting from this event, haven't always been defined with the greatest of clarity. My preference has always been for those terms that convey the clearest meaning of the related employment standards and source deduction requirements.
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