The Implications of Rehiring an Employee

Many companies rehire employees who have worked for them in the past.  Typically, they have a “Re-employment Policy” which details the privileges that will be re-instated (i.e. benefits, vacation, and seniority).  However, they may not have considered the obligation regarding severance pay should the renewed relationship not work out.

The company is required to pay severance for broken periods of service when they add up to five (5) years or more (if severance is applicable).  For example, if an employee had worked previously for the company for 2 years, resigned and was away for 2 years, rehired and worked for another 4 years and then the employee is terminated, he/she would be entitled to severance based on the combined service – therefore, 6 years (the 2 years previously employed plus the current 4 years of employment).  Notice would just be required on the current employment period of 4 years (therefore, 4 weeks of working notice or pay).   Under the Employment Standards Act, 2000 minimums, the total termination pay would be four (4) weeks of notice and six (6) weeks’ severance (if applicable).   In addition, it doesn’t matter how long the break in service is or the reason the employee left initially (quit or termination).  So rehiring an employee can mean taking on a potential severance liability.

Some suggestions when considering an employee for re-hire include:

  • Insuring that the employee’s qualifications meet the requirements of the vacant position;
  • Confirming that he/she had been in good standing at the time of departure;
  • Reviewing the privileges you may consider reinstating (benefits, vacation, etc.) as there is no legal obligation to do so;
  • Clearly outlining all terms in the new offer letter.

5 thoughts on “The Implications of Rehiring an Employee”

  1. What if the person is hired back into a completely new position? Would you be able to apply a 3 month probationary period to determine suitability – without the concern of notice and severance pay for the combined length of their employment?

  2. What if the person is hired back into a completely new position? Would you be able to apply a 3 month probationary period to determine suitability – without the concern of notice and severance pay for the combined length of their employment?

  3. Christy…thank you for your question.

    It doesn’t matter what position the person is rehired in. The service still counts from any past employment stints with the company.

    However, if the employment relationship ended in termination previously, any severance paid at that time would be deducted if the relationship ends in termination again. For example, the first stint was 6 years then the employee left for 2 years and was back for four years. The payment (under Ontario ESA) would be:

    1st time – 6 weeks notice & 6 weeks severance
    2nd time – 4 weeks notice & four weeks severance (10 combined years – 6 already paid)

    You may want to indicate previous severance paid in the offer letter so that the employee clearly understands.

    Hope this helps answer your question.

  4. Christy…thank you for your question.

    It doesn’t matter what position the person is rehired in. The service still counts from any past employment stints with the company.

    However, if the employment relationship ended in termination previously, any severance paid at that time would be deducted if the relationship ends in termination again. For example, the first stint was 6 years then the employee left for 2 years and was back for four years. The payment (under Ontario ESA) would be:

    1st time – 6 weeks notice & 6 weeks severance
    2nd time – 4 weeks notice & four weeks severance (10 combined years – 6 already paid)

    You may want to indicate previous severance paid in the offer letter so that the employee clearly understands.

    Hope this helps answer your question.

  5. Sandra Salinas

    What are the legal issues with rehiring someone who took a severance package? Is the company required to offer employment to everyone that took the severance package? Can we extend an offer of employment to one and not all who took the severance package and left the company?

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