What is Severance Pay in Alberta?
Severance pay in Alberta is the compensation a non-unionized employee is entitled to when they are fired, let go, or terminated without cause by their employer. It acts as a financial bridge between jobs and is mandatory under both the Employment Standards Code (ESC) and common law. Entitlements range from a minimum of one week’s pay after 90 days of employment to a maximum of 24 months’ pay for a full severance package.
Learn More
👆 Click to Expand
How Much Severance Pay Should I Get In Alberta?
The amount of compensation you are owed is determined by two separate legal frameworks: Alberta’s Employment Standards Code (ESC) and common law.
Full severance pay (common law)
Common law severance in Alberta is set by our courts and almost always provides significantly more compensation than the minimums required by the ESC.
To calculate a full common law package, the following factors are analyzed:
- Age
- Length of employment
- Position and salary
- Availability of similar employment
- Bonus, commission, and benefits
- Overtime pay
Over 90% of companies offer far less than what is legally owed. If you do not receive enough, it qualifies as a wrongful dismissal.
Minimum Notice Under the Employment Standards Code
The ESC provides the minimum amount of notice or pay-in-lieu an employer must provide.
| Length of Service | Minimum Severance (ESC) |
|---|---|
| 90 days to less than 2 years | 1 week’s notice |
| 2 years to less than 4 years | 2 weeks’ notice |
| 4 years to less than 6 years | 4 weeks’ notice |
| 6 years to less than 8 years | 5 weeks’ notice |
| 8 years to less than 10 years | 6 weeks’ notice |
| 10 years or more | 8 weeks’ notice |
What Is the Maximum Severance Pay?
In Alberta, severance pay can reach a maximum of 24 months’ pay for non-unionized employees. This maximum is based on common law entitlements and is typically reserved for long-service employees in specialized or senior roles.
Is Severance Pay Mandatory In Alberta?
Yes, severance pay is mandatory if:
- You are terminated without cause
- You are constructively dismissed (e.g., through a demotion or toxic environment)
- You are incorrectly fired for cause
- You are not provided sufficient working notice
Severance is not mandatory if you quit willingly, retire, or reach the end of a limited-term contract.
How Does an Employment Contract Affect My Severance?
Employers often use employment contracts to restrict employees to the ESC minimums. However, these clauses are frequently invalid because they are poorly drafted or outdated. If a clause is illegal or fails to meet ESC standards, the employee is entitled to full common law severance.
How Is Severance Pay Provided and Taxed?
Severance can be paid as a lump sum, through salary continuance, or over a set period. Because it is considered employment earnings, it is taxable. You may defer taxes by placing the amount into an RRSP or TFSA.
Why You Should Contact Samfiru Tumarkin LLP
You should not rely on Employment Standards to get your severance, as they only enforce the minimum ESC entitlements.
At Samfiru Tumarkin LLP, our experienced Alberta employment lawyers negotiate for fair common law compensation, which often results in months of additional pay.
If you have been let go, do not sign any offer until it has been reviewed by our team.