Severance Pay Ontario: How Much Are You Owed?

What is Severance Pay in Ontario?

Severance pay in Ontario is compensation owed to non-unionized employees when they lose their job. Under Ontario’s Employment Standards Act (ESA), severance is mandatory if you’ve worked for five or more years and your employer meets specific requirements. However, under common law, severance can be much higher—up to 24 months of pay, depending on your age, position, and years of service.

If you’ve lost your job, speak to our Ontario employment lawyers at Samfiru Tumarkin LLP to get the compensation you deserve. Consult with Canada’s most positively reviewed law firm today! We proudly serve clients across the province through our Toronto and Ottawa offices.

Watch the video below from the Employment Law Show and read on to learn more about your severance rights.

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Is Severance Pay Mandatory in Ontario?

Yes, severance pay is mandatory in Ontario if you lose your job. All non-unionized employees are entitled to severance pay or termination pay, as long as certain conditions are met.

You are entitled to severance pay in situations like:

• • • You’re fired without cause
    • You’re wrongfully terminated “for cause” (where the employer incorrectly claims cause)
    • You’ve been constructively dismissed (your working conditions were unfairly changed)
    • You don’t receive adequate notice of termination

However, severance pay is not mandatory if:

• • • You quit your job
    • You voluntarily retire or resign
    • Your fixed-term contract ends

It’s important to contact an employment lawyer at Samfiru Tumarkin LLP before signing any severance package to ensure you receive the full amount you’re owed.

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How is Severance Pay Calculated in Ontario?

Severance pay in Ontario is calculated based on factors like:

• • • Your age
    • Length of employment
    • Your position
    • Your salary
    • Bonuses, commission or overtime pay
    • How difficult it is to find a similar job

In Ontario, the ESA provides a minimum of one week’s pay per year of service, up to 26 weeks. However, common law can award employees up to 24 months of severance pay. Most employees are entitled to far more than the minimum ESA entitlements.”

Under the Employment Standards Act (ESA), you are entitled to one week’s pay per year of service, up to a maximum of 26 weeks. However, this is the minimum entitlement. Common law allows for severance pay of up to 24 months, especially for older, long time employees or those in higher positions.

To get an estimate of how much severance pay you are owed, use our Severance Pay Calculator or consult an employment lawyer at Samfiru Tumarkin LLP.

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What’s the Maximum Severance Pay in Ontario?

Under Ontario’s Employment Standards Act (ESA), the maximum severance pay you can receive is 26 weeks. However, common law allows employees to receive up to 24 months’ pay, depending on their specific situation, such as their age, position, and years of service. The

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How Can I Get More Severance Pay in Ontario?

To maximize your severance pay, it’s essential to have an Ontario employment lawyer negotiate on your behalf. Many employers offer packages far below what you are owed. This is considered a wrongful dismissal.

LEARN MORE
• Should I negotiate my own Ontario severance package?

At Samfiru Tumarkin LLP, our lawyers regularly increase severance packages by tens of thousands of dollars. Reach out for a consultation today, and let us ensure you receive what you’re truly owed.

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Severance Pay vs. Termination Pay

Severance pay and termination pay are part of your severance package. Here’s how they differ

• Termination pay compensates you for the notice period your employer should have provided.
• Severance pay: Compensates you for your years of service and helps bridge the gap until you find a new job

Both termination pay and severance pay help support you as you transition to new employment. Learn more about the difference between the two types of compensation in Ontario.

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Who Is Entitled to Severance Pay in Ontario?

In Ontario, you are eligible for severance pay if:

• You’ve worked for your employer for five or more years, and
• Your employer has a payroll of at least $2.5 million, or
• The business is closing, and 50 or more employees are being laid off.

Whether or not you meet these requirements, you are still entitled to full severance under common law, which is much more generous. To find out if you qualify for severance pay, talk to our employment lawyers.

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Can I Ask for Severance Months After Being Let Go?

Yes, you can request severance up to two years after being let go. This two-year window is known as the limitation period. It’s critical to avoid signing any termination papers before consulting with an employment lawyer, as this could affect your rights.

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Should I Use the Ministry of Labour to Get Severance Pay?

Do not use the Ministry of Labour if you want your full severance. They can only help you obtain the minimum severance under the ESA. To secure a larger severance package under common law, contact Samfiru Tumarkin LLP for a more comprehensive approach.

If you file a claim with the Ministry, you’ll lose the chance to pursue a more substantial severance package through a lawyer at Samfiru Tumarkin LLP. To get the full compensation you’re owed, always contact our team first.

LEARN MORE
• Employment Lawyer Files Claim Against Ministry of Labour over Severance

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How is Severance Paid Out in Ontario?

Severance pay in Ontario can be paid in three ways:

• Lump-sum payment (one-time payment)
• Salary continuance (regular pay over a set period)\
• Installments (spread over time

How you receive your severance can affect how much tax you’ll pay. You can also request to have your severance paid into an RRSP to defer taxes.

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Is Severance Pay Taxable in Ontario?

Yes, severance pay is taxable in Ontario because it is considered a form of employment income. How you are taxed depends on how you receive your severance:

• • • Lump-Sum Payment: If you receive your severance as a lump sum, your employer will deduct income tax (a withholding amount), but there won’t be deductions for CPP or EI. You can also choose to deposit the severance into an RRSP or RPP, in which case it won’t be taxed immediately but will be taxed when you withdraw it.
    • Salary Continuance: If you opt for salary continuance, you’ll continue to receive your regular salary over time, and you’ll be responsible for CPP, EI, and RPP contributions as usual.

Some employers may allow you to spread out your severance payments over a longer period, which may offer tax advantages depending on your situation. It’s best to consult an employment lawyer to discuss the most beneficial option for your severance package.

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More Resources on Severance Pay

• • • Do hourly employees get severance pay in Ontario?
    • Wrongful dismissal in Ontario
    • Mass layoffs in Ontario: Rights to severance
    • Severance pay by company
    • Severance pay in the construction industry

Ontario’s Leading Employment Lawyers: Get the Compensation You Deserve

At Samfiru Tumarkin LLP, we’ve successfully represented thousands of non-unionized employees across Ontario, securing millions of dollars in compensation for those facing workplace issues. Whether you’re negotiating a severance package, dealing with a wrongful dismissal, or navigating other employment challenges, our team is here to fight for your rights.

We offer expert legal advice on a wide range of employment issues, from severance pay disputes to workplace harassment, and everything in between—including disability claims and personal injury matters outside the work environment. Our dedicated lawyers will ensure you get the full compensation you’re entitled to.

Don’t leave your future in your employer’s hands—put it in ours. Find out why were chosen as one of Canada’s Best Law Firms in 2024 by The Globe and Mail. Contact us today or call 1-855-821-5900 for a consultation, and take the first step toward protecting your rights and securing your financial future.

Explore more resources on employment law by visiting our For Employees and Law Essentials service pages, and discover how we can help you resolve your workplace issues.