Common Law Severance in Canada: How Much Are You Really Owed?

If you’ve been fired or laid off in Canada, your employer may tell you they’ve met their legal obligations by providing the “minimum” severance required by law. In many cases, that’s misleading — and costly. Most non-unionized employees in Canada are entitled to common law severance, which is often far greater than the minimum amounts set out in employment standards legislation.

Understanding the difference between statutory severance and common law severance can mean the difference between accepting a lowball offer — and receiving what you’re truly owed.

What Is Common Law Severance in Canada?

Common law severance is the amount of compensation a non-unionized employee is legally entitled to when an employer terminates their employment without cause. Courts determine this amount based on past decisions, not employment standards minimums.

Unlike statutory severance, which legislation sets, judges calculate common law severance by applying long-standing legal principles to the employee’s situation.

Common Law Severance vs. Statutory Severance: What’s the Difference?

This distinction is critical — and frequently misunderstood.

Statutory Severance (Minimum Entitlements)

Employment standards legislation in each province sets out minimum notice or termination pay, usually based mainly on length of service.

These are the bare minimums an employer must provide — not the full legal entitlement in most cases.

Government agencies, including the Ministry of Labour, can only enforce these minimums.

Common Law Severance (Full Legal Entitlement)

Under Canadian common law, our legal system assess severance pay in Canada based on a wider range of factors, including:

• Age
• Length of service
• Position and level of responsibility
• Availability of comparable employment

Because these factors vary from person to person, there is no fixed formula — but courts routinely award severance well beyond statutory limits.

How Is Common Law Severance Calculated?

Courts rely on the Bardal factors, which look at the full employment context — not just length of service.

For example:

• Older employees often receive higher severance, especially if re-employment is difficult
• Senior or specialized roles usually attract longer notice periods
• Even short-service employees can get months of severance, not weeks

This is why two employees with the same length of service can receive very different severance entitlements.

Why Most Severance Offers Ignore Common Law Entitlements

Most employers base their severance offers on:

• Employment standards minimums
• Internal company policies
• Cost-containment strategies

They often:

• Present the offer as “standard”
• Impose short deadlines
• Suggest the offer is non-negotiable

But none of that changes your common law rights.

Can an Employment Contract Limit Common Law Severance?

Sometimes — but not always.

Many employment contracts include termination clauses that attempt to limit severance to statutory minimums. However, courts frequently strike down these clauses if they are:

• Poorly drafted
• Ambiguous
• Non-compliant with employment standards legislation

If a termination clause is unenforceable, you are still entitled to full common law severance, regardless of what the contract says.

When It Becomes a Wrongful Dismissal Claim

In Canadian employment law, wrongful dismissal usually means a failure to provide proper notice or severance — not wrongdoing by the employer.

If your employer terminated you without cause and failed to provide your full common law entitlement, the termination may amount to wrongful dismissal.

Most wrongful dismissal claims resolve through negotiation — not court — once the employer understands their legal exposure.

How Much Can You Get?

There is no universal answer — but common law severance often includes:

• Pay in lieu of notice
• Continued benefits
• Bonuses, commissions, or incentives
• In some cases, compensation for lost pension or stock options

Employers often owe employees far more than they realize.

How Our Lawyers Help You

At Samfiru Tumarkin LLP, we’ve helped over 50,000 Canadians challenge low severance offers and secure proper compensation.

Our lawyers:

• Review your severance offer and employment contract
• Calculate your common law entitlement
• Negotiate directly with your employer
• Resolve most claims without going to court

Common Law Severance Applies Across Canada

Common law severance principles apply to non-unionized employees across Canada, although provincial legislation can still affect minimum standards.

For province-specific guidance, visit:

• Severance Pay Ontario
• Severance Pay Alberta
• Severance Pay British Columbia

Get Legal Advice Before You Accept a Severance Offer

Once you sign a severance agreement, you usually give up your right to pursue full compensation.

Before accepting any offer:

• Understand your common law severance rights
• Get clear legal advice
• Know what you’re truly owed

At Samfiru Tumarkin LLP, our employment lawyers help thousands of employees understand their rights and secure fair treatment at work, and features more than 3,000 five-star reviews from pleased clients.