Termination pay in Ontario: What you need to know

When employment ends in Ontario, non-unionized employees are typically entitled to termination pay.

Under the province’s Employment Standards Act (ESA), companies must provide notice or termination pay to qualifying staff members.

Here’s an overview of Ontario termination pay, who qualifies, and how it’s calculated.

What is Termination Pay in Ontario?

Termination pay is a form of compensation provided when an employer ends an employee’s job without sufficient advance notice.

If your employer chooses not to give you a working notice period, they must offer termination pay instead.

This provides immediate financial support while you transition to new employment.

ESA Termination Pay Requirements

The Employment Standards Act (ESA) sets the minimum requirements for termination pay in Ontario, ensuring employees receive fair notice or pay when employment ends.

Under the ESA, termination pay entitles eligible employees to one week of pay per year of service, up to a maximum of 8 weeks.

Who is Eligible for ESA Termination Pay?

To qualify for termination pay under the ESA, you must:

• Have worked for the employer for at least three months continuously.
• Be dismissed without cause or laid off for an extended period.

If you’ve met these requirements, you’re legally entitled to termination pay if the employer doesn’t provide the required notice.

ESA Termination Pay Calculation in Ontario

The ESA specifies the following termination pay requirements based on the length of service:

• 3 months to less than 1 year: 1 week of notice or pay
• 1 year but less than 3 years: 2 weeks of notice or pay
• 3 years but less than 4 years: 3 weeks of notice or pay
• 4 years but less than 5 years: 4 weeks of notice or pay
• 5 years but less than 6 years: 5 weeks of notice or pay
• 6 years but less than 7 years: 6 weeks of notice or pay
• 7 years but less than 8 years: 7 weeks of notice or pay
• 8 years or more: 8 weeks of notice or pay

These minimums are guaranteed under the ESA, but employees are often entitled to additional compensation under common law.

Common Law Entitlement to Termination Pay

Beyond the ESA, many employees are eligible for additional pay if their employment contract does not limit entitlements to the ESA minimums.

Compensation under common law can significantly greater than ESA standards, considering factors such as:

• Age
• Length of Service
• Position and Salary
• Availability of Comparable Employment

Under common law, employees can often receive up to 24 months of pay.

To find out more about this type of compensation on our Severance Pay Ontario resource.

If you’re unsure whether your entitlements fall under termination or severance pay, visit our guide on the differences between termination and severance pay.

For more details, consult an Ontario employment lawyer at Samfiru Tumarkin LLP who can assess your unique situation and determine your full entitlements.

How Much Termination Pay Should You Get?

If your employment contract does not specify a termination clause limiting your compensation to ESA minimums, you likely qualify for compensation under common law. This often results in more substantial pay than the ESA’s minimums.

In Ontario, the amount of termination pay varies based on:

• Employment Length: Longer service generally leads to higher entitlements.
• Type of Role: Seniority, specialized skills, and high-responsibility roles are often awarded longer notice periods.
• Age: Older employees typically receive longer notice periods, especially if finding comparable work may be challenging.

Working Notice vs. Termination Pay in Ontario

An employer may choose to provide you with working notice rather than termination pay.

During the working notice period, you continue to work under the same conditions, with pay, until your employment officially ends.

Employers often don’t provide enough working notice. If your working notice period doesn’t align with Ontario’s legal requirements, you are eligible for additional compensation.

Consulting a Samfiru Tumarkin LLP employment lawyer can help confirm whether your notice period is adequate.

What to Do If You’re Not Offered Enough Termination Pay

If your employer offers termination pay below the ESA standards or fails to meet common law requirements, it may constitute wrongful dismissal.

Many employees receive only the ESA minimum when they’re actually entitled to a larger amount under common law.

If your employer offers termination pay below the ESA standards or fails to meet common law requirements, it may be a wrongful dismissal.

Most employees working in Ontario receive only the ESA minimum when they’re actually entitled to a larger amount under common law.

If you’re unsure about how termination pay differs from severance pay, check out our detailed explanation on the difference between termination and severance pay in Ontario.

Why Choose Samfiru Tumarkin LLP for Termination Pay Review?

At Samfiru Tumarkin LLP, our experienced employment lawyers help Ontario employees secure full termination and severance pay when they’re let go.

If your termination pay doesn’t reflect your full entitlements, our team can review your severance package and ensure you receive the maximum compensation.

Contact us today to arrange a consultation, or use our Ontario Severance Pay Calculator to estimate what you may be owed.