What do I need to know before I hire, discipline or let someone go?

The label in a contract doesn't decide this — what matters is the real relationship: who controls the work, who supplies the tools, who carries the financial risk, and whether the person works mainly for one business or runs their own. Ontario's Employment Standards Act, 2000 (ESA) applies once someone is an employee, and section 5.1 says an employer cannot simply treat an employee as if they were not one.

Getting this wrong is expensive: a worker paid as a "contractor" for years who is later found to be an employee can claim unpaid overtime, vacation pay and termination entitlements going back through the relationship. If you are unsure which a worker is, that classification is worth confirming before you sign anything, not after a dispute starts — and worth revisiting if the day-to-day relationship changes later, since what decides the question is how the work actually happens, not what the paperwork calls it.

A contract can offer more than the ESA gives, but never less — section 5 makes any term that falls below an ESA minimum void, and the minimum applies in its place instead. Within that floor, a written contract is where an owner actually sets the terms: job title and duties, compensation and how it can change, hours, a probationary period, benefits, and — most importantly for what happens later — a termination clause.

Ontario courts have struck down a large share of the termination clauses they see, usually because the wording tried to contract below the ESA minimum somewhere in the fine print. A single non-compliant sentence can void the entire clause, not just the offending word, and once it's void the employee falls back to common-law reasonable notice instead of the number the contract intended. A termination clause is worth reviewing before it is signed, not after someone has to be let go.

A few Part-by-Part minimums catch new employers most often: overtime after the weekly threshold, at least the minimum wage in force at the time (it changes each year — check the current rate before setting pay), vacation time and vacation pay, and public holiday pay. None of these can be waived by agreement, whatever the contract says or how willing the employee is to sign it away — section 5 makes the waiver itself void, not just unenforceable.

On a hire from a business you bought: if you take over the seller's employee within 13 weeks of the sale, the ESA treats the employment as continuous — the employee's years with the seller count toward their notice and severance with you. That single rule drives most of the questions we hear about business sales, and it's covered in depth on our Business Purchase and Business Sale centres.

Once someone has worked for you continuously for three months or more, the ESA requires written notice before termination, or pay instead of notice. The statutory minimum runs from one week (under a year of service) up to eight weeks (eight years or more). That is a floor, not the whole picture: unless a valid, enforceable termination clause limits it, Ontario common law entitles a dismissed employee to "reasonable notice," assessed case by case and often well beyond the ESA weeks — this is the gap that produces most wrongful dismissal claims.

Severance pay is a separate, narrower entitlement on top of notice: it only applies to an employee with five or more years of service, and only where your payroll is $2.5 million or more (or the termination is part of a permanent shutdown affecting 50 or more employees within six months) — capped at 26 weeks' pay.

Every employer, regardless of size, must have written policies on workplace violence and workplace harassment, reviewed at least once a year. If you regularly employ five or fewer workers you don't have to post them, but you still have to have them in writing and be able to produce them.

Ontario's Human Rights Code gives every person the right to equal treatment in employment without discrimination on protected grounds — race, sex, disability, family status, age and others listed in the Code. That applies to hiring, discipline and termination decisions alike, and it sits alongside, not instead of, your ESA obligations.