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

If you were fired or laid off in Ontario, your employer may claim they’ve met their legal obligations by offering only the “minimum” severance required under Ontario law. In many cases, that statement is misleading — and expensive.

Ontario courts entitle most non-unionized employees to common law severance, which is often far greater than the minimum notice or termination pay set out in the Employment Standards Act (ESA).

When you understand how this type of compensation works in Ontario, you put yourself in a position to challenege a low offer — and recover what the law actually requires your employer to pay.

What Is Common Law Severance in Ontario?

Ontario courts determine common law severance to non-unionized employees when an employer terminates them without cause, often far beyond ESA minimums.

Judges — not government formulas under the ESA — decide how much severance an employee is owed.

As a result, common law severance in Ontario is often significantly higher than what employers initially offer.

Common Law Severance vs. ESA Severance in Ontario

This distinction is critical — and frequently misunderstood.

ESA Severance (Minimum Standards)

Ontario’s Employment Standards Act sets out minimum notice or termination pay, largely based on length of service. These are the bare minimums employers must provide.

The Ministry of Labour can only enforce these ESA minimums — not your full legal entitlement.

Common Law Severance (Your Full Legal Entitlement)

Under Ontario common law, severance pay is assessed using a broader and more realistic set of factors, including:

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

Because of these factors, there is no fixed formula. Courts routinely award severance far beyond ESA minimums — sometimes reaching up to 24 months’ pay.

How Is Common Law Severance Calculated in Ontario?

Ontario courts apply the Bardal factors to assess the full employment context — not just how long you worked for an employer.

For example:

• Older employees often receive higher severance, especially if re-employment is difficult
• Senior, managerial, or specialized roles typically attract longer notice periods
• Even short-service employees may be entitled to months of severance, not weeks

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

What Is a Typical Common Law Severance Package in Ontario?

There is no standard severance package under Ontario common law. However, as a general guideline:

• Short-service employees may still be owed several months of severance
• Long-service employees may be entitled to a year or more of compensation
• Older employees often receive enhanced severance, particularly if their job prospects are limited

Because every case is unique, the only way to know whether your severance offer is fair is to assess all legal factors together.

Why Most Severance Offers in Ontario Are Too Low

Most Ontario employers base severance offers on:

• ESA minimums
• Internal company policies
• Cost-containment goals

They may:

• Say the offer is “standard”
• Impose short deadlines
• Claim the offer is non-negotiable

But none of this overrides your common law rights.

Accepting a severance package without understanding your Ontario common law entitlement often means leaving significant money on the table.

Can an Employment Contract Limit Common Law Severance in Ontario?

Sometimes — but not always.

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

• Poorly drafted
• Ambiguous
• Non-compliant with the ESA

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

When It Becomes a Wrongful Dismissal Claim in Ontario

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

When an employer terminates you without cause and underpays your common law severance, the law often treats the termination as wrongful dismissal.

In Ontario, employers resolve most wrongful dismissal claims through negotiations once they understand the financial risk they face.

What Does Common Law Severance in Ontario Include?

Common law severance may include:

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

Many Ontario employees are owed far more than they realize.

How Our Ontario Severance Lawyers Help

At Samfiru Tumarkin LLP, we’ve helped tens of thousands of Ontario employees challenge low severance offers and secure proper compensation.

Our employment lawyers in Ontario:

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

Common Law Severance Applies Across Ontario — and Canada

Common law severance applies to non-unionized employees throughout Ontario, but similar principles apply across Canada.

For broader context, see:

• Common Law Severance in Canada
• Severance Pay Ontario
• Severance Pay Canada

Get Legal Advice Before You Accept a Severance Offer

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

Before accepting any offer:

• Understand your Ontario common law severance rights
• Get clear legal advice
• Know what the law owes you