Small business less than 1 million is sales and 5 employees. I Have a part time employee who has been with us for 2 years in a retail capacity and is currently a student. We have tried to work with the employees schedule conflicts but it has become an issue of what is best for my business. The most recent schedule has been rejected. If the employee wants to work only one day per week and I accept these terms, would the severance then be based on the one day per week? Finally could I use notice in lieu?

Generally speaking, termination pay/severance pay pursuant to the common law is based on what the employee would have earned during the reasonable notice period. In this case, if the employee wants or accepts the reduction in hours, termination/severance pay would based based on his new schedule of 1 day per week. If you plan on terminating this employee, you will need to determine how much he/she is entitled to under both the applicable employment standards legislation (likely the Employment Standards Act, 2000) and the common law in terms of notice of termination or pay in lieu of such notice. Please contact our firm to discuss this matter further and determine how we can assist you.