If your company closes in BC, you may still be entitled to severance pay. An employer shutting down its business doesn’t automatically eliminate its obligation to compensate employees who lose their jobs.

For non-unionized employees, full severance can be worth significantly more than the minimum required by BC’s Employment Standards Act. However, if the company is bankrupt, recovering that compensation can be extremely difficult.

⚠️ Your workplace is closing? Don’t assume you’re owed nothing or accept a severance offer without checking your rights. A business closure doesn’t automatically cancel your entitlement to compensation.

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

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Are Employees Owed Severance When a Company Closes in BC?

Yes. Employees who lose their jobs because a company closes may still be entitled to severance pay.

In BC, employers must provide eligible employees with proper termination notice, pay instead of notice, or a combination of both.

This applies whether the employer is closing permanently, shutting down a location or eliminating positions because of financial difficulties, subject to applicable legal exceptions.

Learn more about termination without cause in BC.

How Much Severance Are You Owed if Your Company Closes?

BC’s Employment Standards Act sets minimum termination entitlements, but many non-unionized employees are owed substantially more.

Under the Act, eligible employees receive:

  • After 3 months: 1 week’s notice or pay.
  • After 1 year: 2 weeks’ notice or pay.
  • After 3 years: 3 weeks’ notice or pay, plus 1 additional week for each further year, up to 8 weeks.

Your full severance entitlement may be much higher, depending on your age, length of service, position, employment agreement and ability to find comparable work.

In appropriate cases, full severance can reach up to 24 months’ pay.

Read our Severance Pay BC guide or use the Severance Pay Calculator to estimate what you’re owed.

What if Your Employer Says It Can’t Afford Severance?

Financial difficulties don’t automatically eliminate an employer’s obligation to pay severance.

If a business is closing because of declining sales or rising costs, employees may still be entitled to termination compensation.

However, there’s an important difference between a business experiencing financial hardship and one that has formally entered bankruptcy or insolvency proceedings.

If your employer is still operating and has assets, recovering severance may be possible. If the company is insolvent, your options can be much more limited.

What Happens to Severance if the Company Goes Bankrupt?

If your employer declares bankruptcy or enters creditor protection, you’re unlikely to recover your full severance pay from the company.

Although you may still be legally owed severance, collecting it can be extremely difficult. Employees claiming severance often rank behind secured creditors, and there may be little money left to distribute.

Certain government programs, including the Wage Earner Protection Program (WEPP), may provide limited compensation to eligible employees.

If your employer is bankrupt or restructuring, read our Bankruptcy in Canada: Guide for Employees for a detailed explanation of your options and the practical limits on recovering severance.

💡 Important: A business closing because it’s losing money isn’t necessarily bankrupt. Whether the employer is simply shutting down or has entered formal insolvency proceedings can make a significant difference to your ability to recover severance.

What if Only One Store or Location Closes?

You may still be entitled to severance if your employer closes your location but continues operating elsewhere.

For example, a retailer closing its Vancouver store while keeping other BC locations open may still owe severance to employees whose jobs are eliminated.

If you’re offered another position at a different location, your rights depend on whether the offer is reasonable and whether it significantly changes your employment terms.

Don’t reject a transfer or resign before understanding how that decision could affect your compensation.

What if a Company Closes and Lays Off 50 or More Employees?

BC has additional group termination requirements when 50 or more employees lose their jobs at a single location within a two-month period.

The Employment Standards Act requires the following group notice or pay, subject to applicable exceptions:

  • 50 to 100 employees: 8 weeks.
  • 101 to 300 employees: 12 weeks.
  • 301 or more employees: 16 weeks.

These group termination requirements are in addition to the individual minimum termination entitlements under BC employment standards law.

Employees also have additional common-law severance rights — potentially resulting in as much as 24 months’ pay.

See our Working Notice BC guide for more information about notice periods and termination pay.

What Should You Do if Your Company Is Closing?

  1. Don’t resign. Wait for your employer to confirm your termination and the terms of your departure.
  2. Get the details in writing. Ask for your termination date, final pay and any severance offer.
  3. Keep your records. Save your employment agreement, pay statements and termination documents.
  4. Find out whether the business is bankrupt. Formal insolvency proceedings can significantly affect your recovery options.
  5. Check your severance entitlement. If the company is still solvent, don’t accept a reduced package without understanding what you’re owed.

Company Closing BC: Frequently Asked Questions

Do you get severance if a company closes in BC?

Yes, you may be entitled to severance when your employer closes its business. The amount depends on your employment circumstances and whether the employer can pay.

Can a company close without paying severance?

A closure doesn’t automatically eliminate severance obligations. However, employees of bankrupt businesses may have difficulty collecting the compensation they’re legally owed.

Am I owed severance if my store closes but the company stays open?

Yes, you may be. Closing one location doesn’t automatically remove your severance rights, even if the company continues operating elsewhere.

Does bankruptcy mean I won’t get severance?

You may still be legally owed severance, but recovering it from a bankrupt employer is often very difficult. Limited government compensation may be available to eligible workers.

Company Closing in BC? Find Out What You’re Owed.

If your employer is closing its business or shutting down your location, don’t assume the severance package offered is all you’re entitled to.

The BC employment lawyers at Samfiru Tumarkin LLP help non-unionized employees across British Columbia understand their rights when businesses close, review severance offers and pursue compensation where recovery is possible.

Before you sign, always check first.

➡️ Get a Consultation or call 1-855-821-5900.

Company Closing? You Could Be Owed Severance.

A business closure doesn't automatically eliminate your severance rights. Before accepting an offer, find out what you're entitled to.

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