Continuing Benefits During the Notice Period in Ontario: Employer Obligations

When an Ontario employer plans a termination, most of the attention goes to the paycheque: how many weeks of notice or pay in lieu is owed, and when it needs to go out. Group benefits — the drug plan, the dental coverage, the life and disability insurance — get forgotten far more often, and that gap is one of the more common ways an otherwise well-handled termination turns into a legal problem.

Continuing benefits during the notice period is not an optional courtesy. For most terminations without cause, Ontario law expects the employee's existing benefit coverage to keep running for as long as the statutory notice period lasts, whether the employer uses working notice, pay in lieu, or some mix of the two.

This article walks through what that obligation actually covers, where employers most often get it wrong, and what a defensible process looks like.

What "the Notice Period" Actually Covers

Before benefits continuation makes sense, it helps to be clear on what "notice period" means. For an employee terminated without cause after three months of service, Ontario's Employment Standards Act, 2000 (ESA) sets a statutory minimum:

(Figures as of mid-2026 — verify the current bands before relying on them, since they can change.)

This is a floor, not a ceiling. A dismissed employee may also be entitled to a longer period of notice at common law, assessed on the specific facts of their situation rather than a fixed formula. Either way, benefits continuation is tied to whatever the applicable notice period turns out to be.

Why Benefits Continuation Is Part of the Deal

The general rule is straightforward in principle: during the statutory notice period, the employer is expected to maintain the employee's existing benefit plan contributions and coverage as though the employment relationship were continuing normally — not to treat the termination date as also the last day of coverage.

This applies regardless of the mechanism used to deliver the notice. Whether the employee works out the notice period, is paid it out in a lump sum, or some combination is used, the underlying benefits obligation doesn't disappear just because the employee has stopped coming into the office.

Working Notice vs. Pay in Lieu: Different Practical Effects

• Working notice. The employee keeps working and remains an active plan member, so benefits continuation tends to happen automatically as a byproduct of ongoing employment — provided nothing is cancelled prematurely.
• Pay in lieu of notice. Once the employment relationship ends immediately and a lump sum is paid instead, the employer has to actively account for the value of continued benefits, either by keeping the employee on the plan for the notice period or by addressing the value of that coverage as part of the payment.

Employers sometimes assume a lump-sum cheque quietly resolves everything, including benefits. It doesn't, unless the arrangement specifically deals with that coverage.

Common Ways Employers Get This Wrong

• [ ] Notifying the insurer to cancel coverage on the termination date, without regard to the length of the statutory notice period
• [ ] Assuming a termination pay lump sum automatically satisfies the benefits-continuation obligation
• [ ] Relying on a termination clause that tries to limit or exclude benefits during notice, without having that clause reviewed
• [ ] Treating benefits continuation as a nice-to-have rather than a distinct obligation running alongside wage continuation

What Happens if Coverage Lapses

If coverage is cancelled too early and the employee has a claim that would otherwise have been covered — a prescription, a dental procedure, a disability event — during what should have been the notice period, the employer can end up on the hook for making the employee whole for that loss, on top of whatever notice or pay was already owed. That exposure is rarely worth the administrative convenience of an early cancellation.

Practical Steps for Employers

1. Confirm the applicable notice period — and get legal advice if a termination clause, long service, or unusual circumstances are involved — before the termination conversation happens.
2. Talk to your insurer or benefits administrator in advance about how continuation will actually be handled, rather than after the fact.
3. Put what is continuing, and for how long, in writing as part of the termination letter.
4. Have your termination clause reviewed by a lawyer before assuming it limits your benefits-continuation obligations — many clauses that try to do this don't hold up.

Frequently asked questions