Severance pay in Canada is compensation that an employee may be owed when their job ends without cause. Your rights depend on whether you are federally regulated or provincially regulated. For federally regulated employees, minimum severance rules come from the Canada Labour Code. For most other employees, severance rules come from provincial employment standards and common law.
The most important thing to know: minimum severance is often much lower than a full severance package. Many non-unionized employees in Canada can be owed as much as 24 months’ pay depending on their age, job, length of service, compensation, and ability to find similar work.
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Severance Pay In Canada At A Glance
Here is the short answer.
- Severance pay in Canada depends on whether your job is federally or provincially regulated.
- Most employees in Canada are provincially regulated, not federally regulated.
- Federally regulated employees are covered by the Canada Labour Code.
- The Canada Labour Code provides minimum termination pay and, in some cases, statutory severance pay.
- Provincial employment standards provide different minimum severance or termination pay rules depending on the province.
- For many non-unionized employees, common law severance is much higher than the minimum amount in legislation.
- A full severance package in Canada can often reach as much as 24 months’ pay.
- Do not sign a severance offer before finding out what you are really owed.
Are You Federally Regulated Or Provincially Regulated?
This is the first question you need to answer.
When people search for “severance pay Canada,” they are often looking for one of two things:
- Federal severance rules under the Canada Labour Code.
- Provincial severance rules for Ontario, British Columbia, Alberta, or another province.
Most employees in Canada are provincially regulated. This includes many employees in retail, restaurants, technology, manufacturing, construction, professional services, healthcare, and most private businesses that operate within one province.
Federally regulated employees work in industries that fall under federal authority, such as banks, airlines, telecommunications, interprovincial transportation, railways, shipping, pipelines, and Canada Post.
If you are not federally regulated, your severance rights are likely based on the employment standards law in your province, plus common law.
Use the guide switch below if you landed on this page but need a provincial severance guide.
Need A Different Severance Guide?
Compare federal, Ontario, Alberta, and BC severance pay.
Who Is Federally Regulated In Canada?
A small portion of Canadian employees are federally regulated. These employees are covered by the Canada Labour Code instead of provincial employment standards.
Federally regulated industries include:
- Banking: RBC, TD, Scotiabank, BMO, CIBC, National Bank, and other banks.
- Telecommunications And Broadcasting: Bell, Rogers, Telus, CBC, and other telecom or broadcast employers.
- Air Transportation: Airlines, airports, aircraft operations, and related aviation employers.
- Railways: Railways that cross provincial or international borders.
- Interprovincial Trucking And Busing: Transportation companies that operate across provincial or international borders.
- Marine Shipping And Port Services: Marine shipping, ferries, canals, tunnels, bridges, and port services that cross borders.
- Pipelines: Oil and gas pipelines that cross provincial or international borders.
- Postal And Courier Services: Canada Post and some courier operations.
- Federal Crown Corporations: Many federal Crown corporations.
- First Nations Band Councils And Indigenous Self-Governments: Certain activities may fall under federal jurisdiction.
Not every job at a large national company is automatically federally regulated. Jurisdiction depends on what the employer does and how the business operates.
Is Severance Pay Mandatory In Canada?
Yes, severance pay can be mandatory in Canada when an employee is terminated without cause, but the specific rules depend on the employee’s jurisdiction and length of service.
For federally regulated employees, the Canada Labour Code provides minimum termination notice or pay in lieu of notice after three months of continuous employment. It also provides statutory severance pay for employees with at least 12 months of continuous employment, unless they were dismissed for just cause.
For provincially regulated employees, minimum termination pay or severance pay depends on the province. Ontario, British Columbia, and Alberta all have different minimum standards.
How Federally Regulated Severance Is Calculated
If you are federally regulated, your minimum severance rights under the Canada Labour Code can include two separate payments:
- Termination pay or notice
- Statutory severance pay
These are minimum amounts. They are not necessarily your full severance entitlement.
Termination Pay Or Notice Under The Canada Labour Code
When a federally regulated employer terminates an employee, the employer must provide written notice, pay in lieu of notice, or a combination of both.
The minimum termination notice or pay in lieu of notice is based on length of service.
| Continuous Employment | Minimum Notice Or Pay In Lieu |
|---|---|
| At least 3 months | 2 weeks |
| At least 3 years | 3 weeks |
| At least 4 years | 4 weeks |
| At least 5 years | 5 weeks |
| At least 6 years | 6 weeks |
| At least 7 years | 7 weeks |
| At least 8 years | 8 weeks |
Statutory Severance Pay Under The Canada Labour Code
Federally regulated employees with at least 12 months of continuous employment may also be owed statutory severance pay.
The minimum statutory severance pay is the greater of:
- Two days’ wages for each completed year of service; or
- Five days’ wages.
This is separate from termination notice or pay in lieu of notice.
The Common Law Difference: Up To 24 Months Of Pay
The biggest mistake employees make is assuming the minimum amount in legislation is the “standard” severance package.
It is not.
For many non-unionized employees, including federally regulated employees, the minimum amount under the Canada Labour Code or provincial employment standards is only the legal floor.
You may also be owed common law severance, also called reasonable notice or pay in lieu of notice.
Common law severance is based on your personal situation, including:
- Age: Older employees often receive more severance because it can be harder to find comparable work.
- Length Of Service: Long-service employees are often owed more.
- Position And Responsibility: Senior, specialized, technical, sales, management, and executive roles can increase severance.
- Compensation: Salary, bonus, commission, benefits, pension, RRSP contributions, car allowance, and equity may all matter.
- Availability Of Similar Employment: If comparable jobs are limited, severance may be higher.
- Employment Contract: A valid termination clause can limit severance, but many clauses are not enforceable.
A full severance package in Canada can often reach as much as 24 months’ pay.
Case Study
This was demonstrated in Maticevic v. Bank of Montreal, where an 18-year employee in Ontario was awarded 22 months of back pay. The employment lawyer who won that case, Stephen LeMesurier, is a key member of Samfiru Tumarkin LLP.
Canada Severance Pay Examples
These examples are general only. Your actual severance depends on your specific situation.
| Employee Example | Minimum Standards May Be | Possible Common Law Severance |
|---|---|---|
| 2 years of service, age 32, junior employee | A few weeks | 2 to 4 months |
| 7 years of service, age 48, supervisor | Several weeks | 6 to 10 months |
| 14 years of service, age 55, manager | Often capped under minimum standards | 12 to 18 months |
| 22 years of service, age 61, senior employee | Often capped under minimum standards | 18 to 24 months |
The key takeaway: Your minimum entitlements are not the same as your full severance rights.
What Should Be Included In A Severance Package?
A severance package should not always be limited to base salary.
Depending on your job and compensation structure, full severance may include:
- Salary or hourly wages
- Vacation pay
- Bonus
- Commission
- Health and dental benefits
- Disability benefits
- Pension or RRSP contributions
- Car allowance
- Stock options or equity compensation
- Other regular compensation connected to your employment
Constructive Dismissal, Unjust Dismissal, And Wrongful Dismissal
Severance pay is not only an issue when your employer formally says you are “fired.”
Constructive Dismissal
A constructive dismissal can happen when your employer makes a major change to your job without your consent. This could include a major pay cut, demotion, forced relocation, significant schedule change, or removal of important duties.
If you are constructively dismissed, you may be able to treat the change as a termination and pursue severance.
Unjust Dismissal
Unjust dismissal is a special protection for some federally regulated employees.
If you have at least 12 months of service, are not a manager, and are not covered by a collective agreement, you may be able to file an unjust dismissal complaint after being dismissed.
In some cases, an adjudicator can order reinstatement, back pay, or other remedies.
Wrongful Dismissal
A wrongful dismissal happens when you are fired without cause and your employer fails to provide enough notice or severance pay.
This can happen even if your employer was allowed to end your employment. The issue is whether they offered you the full compensation you are owed.
How Long Do You Have To Make A Severance Claim?
Deadlines matter after a termination.
- For many common law wrongful dismissal claims, employees generally have up to two years to start a legal claim.
- For federally regulated unjust dismissal complaints, the deadline is generally 90 days from the date of dismissal.
- For some federal monetary complaints, including unpaid severance pay or pay in lieu of notice, different complaint deadlines can apply.
Common Severance Mistakes In Canada
Avoid these mistakes after losing your job:
- Signing your severance offer too quickly
- Assuming your employer’s first offer is fair
- Believing the minimum amount is your full severance entitlement
- Missing the difference between federal and provincial severance rules
- Assuming a “for cause” termination means you get nothing
- Forgetting about bonus, commission, benefits, pension, or equity compensation
- Accepting salary continuance without checking for a clawback
- Filing the wrong type of complaint before getting advice
- Letting an employer pressure you with an artificial deadline
Do Not Sign Your Severance Offer Without A Review
Employers often set artificial deadlines to pressure employees into accepting low severance offers.
Do not panic. A short deadline does not mean the offer is fair. It also does not mean you lose your rights if you do not sign immediately.
Once you sign a release, you essentially lose your ability to get more.
Before you accept your employer’s offer, find out what your severance package is really worth.
Samfiru Tumarkin LLP has helped tens of thousands of employees across Canada with severance packages, wrongful dismissal claims, and workplace rights.
Severance Pay Canada FAQs
What is severance pay in Canada?
Severance pay is compensation an employee may be owed when their job ends without cause. It can include termination pay, pay in lieu of notice, statutory severance, and common law severance.
How much severance pay do you get in Canada?
It depends on whether you are federally or provincially regulated, your length of service, age, job, compensation, employment contract, and ability to find similar work. Many non-unionized employees can be owed more than the minimum amount required by legislation.
What is the maximum severance pay in Canada?
Minimum statutory severance rules may be capped, depending on your jurisdiction. However, full common law severance can often reach up to 24 months’ pay.
Who is covered by the Canada Labour Code?
The Canada Labour Code applies to federally regulated industries such as banking, telecommunications, broadcasting, airlines, interprovincial transportation, railways, marine shipping, pipelines, postal services, and certain federal Crown corporations.
Are most employees in Canada federally regulated?
No. Most employees in Canada are provincially regulated. This means their minimum employment standards usually come from the province where they work.
Is severance pay mandatory for federally regulated employees?
Yes, federally regulated employees may be owed minimum termination notice or pay in lieu of notice after three months of continuous employment. Employees with at least 12 months of continuous employment may also be owed statutory severance pay, unless they were dismissed for just cause.
What is the difference between termination pay and severance pay?
Termination pay usually refers to pay provided instead of working notice. Severance pay is often used more broadly to describe the full compensation an employee may be owed after termination.
Can I get severance if I was laid off?
Yes, a layoff can trigger severance rights if it becomes a termination or if your employer did not have the right to temporarily lay you off. Do not assume that a “layoff” means you are not owed severance.
Can I get severance if I was fired for cause?
Possibly. Just cause is difficult for employers to prove. Many employees who are told they were fired for cause are still owed severance.
Do unionized employees get severance pay?
Unionized employees usually have to rely on their collective agreement and speak with their union. This page is focused on non-unionized employees.
Should I sign my severance offer?
Not before getting advice. Once you sign a release, it can be very difficult to ask for more. Have your severance package reviewed before you accept it.