Severance pay in Canada is compensation you may be owed when your employment ends. Your full entitlement can be much higher than the minimum termination or severance payment required by employment standards legislation.

How much you receive depends on the law that applies to your job, your employment contract and factors such as your age, length of service, position and ability to find comparable work. There is no single severance formula for every employee in Canada.

Samfiru Tumarkin LLP helps non-unionized employees in Ontario, Alberta and British Columbia understand their severance rights, review offers and pursue compensation they are owed.

⚠️ Received a severance package?
Your employer’s first offer does not determine your full legal entitlement. Have your severance package reviewed before accepting it or signing a release.

Reviewed by: Lior Samfiru, Employment Lawyer and National Co-Managing Partner

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What Is Severance Pay in Canada?

Severance pay is commonly used to describe the compensation an employee receives when their employment ends, including pay instead of notice and other amounts owed after termination.

A severance package can include salary, benefits, bonuses, commissions and other compensation. It may also contain a release, confidentiality terms and conditions affecting future payments.

Termination pay versus statutory severance pay

The terms have different legal meanings:

  • Termination pay: Payment instead of some or all of the notice your employer should provide before ending your employment.
  • Statutory severance pay: A separate payment available to eligible employees under certain laws, including Ontario’s Employment Standards Act and the Canada Labour Code.
  • Common-law severance: Compensation for reasonable notice, which can exceed minimum employment standards where an enforceable contract does not limit that right.

💡 Minimum standards are the starting point.
A package can meet statutory minimums and still fall short of your full entitlement. Statutory and common-law amounts must be assessed together; they are not automatically added on top of one another.

Understand the difference between termination pay and severance pay.

Who Is Entitled to Severance Pay in Canada?

Employees dismissed without cause are generally entitled to notice, compensation instead of notice, or a combination, subject to the applicable law and any enforceable contractual terms.

Entitlements can arise when an employer ends your job through downsizing, restructuring, a permanent layoff or another termination. Your employer does not have to use the word “severance” for compensation to be owed.

What if your employer says you were fired for cause?

An allegation of cause does not establish that you are owed nothing. The facts and applicable legal standards must be reviewed. Statutory exceptions can differ from common-law just cause.

Can you get severance if you quit?

A voluntary resignation usually does not create a right to severance. However, a substantial change to your job imposed without your agreement can amount to constructive dismissal. Get advice before resigning or accepting the change.

Read our guide to severance pay if you quit.

Can you get severance after a temporary layoff?

It depends on the applicable employment standards, your contract and the circumstances. A temporary layoff can raise constructive dismissal issues, and a layoff that exceeds the applicable legal limits can become a termination.

See our layoff versus termination guide.

Severance Pay by Province and Federal Jurisdiction

Canada does not have one set of severance rules for every employee. Most employees are covered by provincial or territorial employment standards. Employees in federally regulated businesses may instead be covered by the Canada Labour Code.

Start with the guide that applies to your employment:

Jurisdiction What to check Detailed guide
Ontario Termination notice or pay, separate statutory severance where eligible, and additional contractual or common-law rights Severance Pay Ontario →
Alberta Minimum termination notice or pay and additional contractual or common-law rights Severance Pay Alberta →
British Columbia Written notice or compensation for length of service and additional contractual or common-law rights Severance Pay BC →
Federally regulated employment Canada Labour Code termination notice, statutory severance, additional compensation and unjust dismissal rights where eligible Federal Severance Pay →

If you work in another province or territory, check the employment standards and legal rules that apply there. Quebec uses a different civil-law framework. Samfiru Tumarkin LLP’s employment law practice assists non-unionized employees in Ontario, Alberta and British Columbia.

How do you know if you are federally regulated?

Banks, airlines, telecommunications companies and certain transportation businesses are commonly federally regulated. Working for a national company does not automatically mean federal law applies.

For example, an employee of a federally regulated bank in Toronto follows federal employment standards rather than Ontario’s standards. Check our list of federally regulated employers if you are unsure.

What are the Canada Labour Code severance minimums?

Eligible federally regulated employees can receive two to eight weeks of individual termination notice or pay after at least three months of continuous employment. After at least 12 months, statutory severance is generally the greater of two days’ wages per completed year of service or five days’ wages.

These are separate minimum entitlements. They do not automatically determine your complete package. Read our federal severance pay guide for eligibility, calculation examples and deadlines. Federal public servants have different rules.

How Much Severance Pay Are You Owed in Canada?

Your severance must be assessed using the applicable minimum standards, your employment contract and any additional reasonable-notice rights. Length of service alone does not determine the answer.

Important factors include:

  • Age: Your age can affect how difficult it is to find comparable work.
  • Length of service: How long you worked for the employer, including any service that must legally be recognized.
  • Position: Your responsibilities, seniority and the nature of your work.
  • Comparable employment: The availability of similar jobs given your experience, training and qualifications.
  • Employment contract: Whether enforceable terms limit or provide additional termination compensation.
  • Total compensation: The salary, benefits, incentives and other compensation used to value your entitlement.

Common-law notice can extend to many months. Long notice periods can reach 24 months, and exceptional cases can exceed that. There is no automatic entitlement to 24 months and no universal maximum for every severance claim.

⚠️ Don’t rely on a “weeks per year” rule.
That approach can confuse minimum statutory payments with your full entitlement. Short-service employees can also have meaningful notice rights.

Severance pay calculation example

Suppose a legal review determines that an employee is entitled to six months of pay instead of notice. With an annual base salary of $72,000, the salary component would be $36,000 before deductions.

Benefits, bonuses and other compensation may also need to be assessed. Amounts already paid, working notice, new employment income and enforceable contract terms can affect the final amount. This illustrates the arithmetic once the notice period is established; it does not predict a six-month entitlement.

Use the Severance Pay Calculator for an initial estimate, then have your actual offer and employment documents reviewed.

What Should a Severance Package Include?

A severance review should consider your total compensation, not just the number of weeks or months of salary offered.

Depending on your contract, compensation plans and applicable notice period, the package may need to account for:

A package can also include confidentiality obligations, restrictions on future work and a release of claims. Those terms deserve attention alongside the payment amount.

Senior employees with complex compensation should also read our executive severance guide.

How Is Severance Paid, and What About Tax and EI?

An offer may provide a lump sum, salary continuance or a combination. The payment structure can affect benefit coverage, timing and what happens if you find another job.

Check whether the offer includes a clawback, requires you to report new employment income or ends payments when you start another job. These conditions can materially affect the package’s value.

Tax withholding and EI treatment depend on the payment and the rules in effect for your situation. Read our guides to severance pay taxes and salary continuance and EI and severance pay.

Do You Have to Sign by Your Employer’s Severance Deadline?

An employer’s deadline for accepting its offer is different from the legal deadline for pursuing your severance rights. A short signing deadline does not establish that the package is fair.

The offer may expire or change if you do not accept it. Request time to get advice, but do not assume you must sign a release immediately to preserve your legal entitlements.

Legal deadlines depend on the jurisdiction and type of claim. An eligible federal unjust dismissal complaint normally has a 90-day deadline from dismissal. Other complaints and civil claims have different limits.

⚠️ Before you sign, always check first.
A valid release can prevent you from pursuing additional compensation. Get advice promptly and check legal filing deadlines while reviewing the offer.

What Should You Do After Receiving a Severance Offer?

  1. Read the entire offer. Include the release, payment conditions and any documents it refers to.
  2. Collect your employment records. Keep your contract, amendments, termination letter, compensation plans and recent pay statements.
  3. Confirm which rules apply. Check whether your job is provincially or federally regulated.
  4. Check deadlines. Distinguish the employer’s offer deadline from legal complaint and claim deadlines.
  5. Have the package reviewed. Check the amount, benefits, incentives and rights you would be giving up.

You can negotiate a severance package when the offer does not properly address your entitlements. Insufficient notice or termination compensation may support a wrongful dismissal claim.

Our wrongful dismissal settlements guide explains what can affect the value and terms of a settlement.

Severance Pay Canada: FAQs

Is severance pay mandatory in Canada?

Employers generally must provide eligible employees with notice or compensation when terminating employment without cause. Separate statutory severance is available in certain jurisdictions where its eligibility requirements are met. Exceptions and enforceable contracts can affect the entitlement.

What is a typical severance package in Canada?

There is no standard package that applies to everyone. An employer’s usual practice or a coworker’s offer does not determine what you are owed. Your jurisdiction, contract and personal circumstances need to be assessed.

Is severance one week or one month per year?

Neither is a universal rule. Some statutory calculations use length of service, but common-law notice depends on multiple factors. A simple per-year formula can undervalue the package.

Do you need five years of service to receive severance?

No. Ontario’s separate statutory severance has a five-year service requirement and additional eligibility conditions. That does not mean employees with less service have no termination or common-law rights. Other jurisdictions use different rules.

Can you get severance if your company closes or is sold?

A closure or sale can affect employment and payment recovery, but it does not automatically erase your rights. Whether employment continues, how the sale is structured and any insolvency proceedings matter. Read our guide to employee rights when a business is sold.

What happens if you find another job?

New employment can affect common-law compensation and payments under an offer’s terms. Statutory minimum entitlements are treated differently. Check mitigation obligations and any salary-continuance clawback before accepting.

Does working notice reduce severance?

Valid working notice can satisfy part or all of a notice obligation. It does not automatically replace a separate statutory severance payment where one is owed. See our working notice guide.

Do federal employees follow the province’s severance rules?

Employees covered by Part III of the Canada Labour Code follow federal minimum employment standards even when they work in a province. Read our federal severance guide. Federal public-service employment requires a separate assessment.

What if you are unionized?

Contact your union about statutory rights, your collective agreement and grievance deadlines. Samfiru Tumarkin LLP’s employment law team does not assist with unionized workplace disputes.

Your Severance Offer May Be Too Low.

The number of weeks in your employer’s offer may not reflect everything you are owed. Have your compensation, contract and release reviewed before accepting.

Before you sign, always check first.

➡️ Have Your Severance Package Reviewed or call 1-855-821-5900.

Have Your Severance Offer Reviewed

Your employer’s offer may not reflect your full entitlements. Have a lawyer review your contract, compensation, benefits and release—and explain your options before you sign.

Request a Severance Package Review