When laying off or terminating employees, employers can provide pay instead of working notice. The pay instead of notice must be equal to the amount of notice an employee is entitled to.
To calculate pay instead of notice, take the employee’s normal weekly wage and multiply by the working notice requirement.
If the employee’s wages vary from week to week, the employer would need to calculate the weekly wage averaged over the employee’s last 13 weeks of work. The weekly average would then be multiplied by the amount of working notice required. Overtime, tips and gratuities are not included in these calculations.
Pay instead of notice must be paid within 14 days. If a pay day falls within the 14-day period, the employer must provide the employee’s pay on that day.
Pay instead of notice is not required if:
- the employee has not completed 13 consecutive weeks of employment;
- the employee quits or retires; or
- the employee is dismissed for just cause.
Entitlements cannot be a part of notice. For example, employers cannot substitute paid vacation time or vacation pay for written notice or for pay instead of notice.
The same goes for overtime banks. Employers cannot schedule the employee to take paid regular time off from an overtime bank as part of the notice period. They also cannot use overtime bank payout as pay instead of notice.