Consultants in Canada can be entitled to severance pay when their contract or working relationship ends. Being called a consultant or independent contractor doesn’t automatically mean you lose your right to compensation.
Your entitlement depends on whether you’re legally an employee, a dependent contractor or a genuinely independent contractor.
💡 Consultant Severance Pay: If you’ve worked mainly for one company, depended on it for your income or been treated like an employee, you may be owed substantial compensation when the relationship ends. Don’t assume your contract label determines your rights.
On This Page:
- Are Consultants Entitled to Severance?
- How Much Severance?
- Independent Contractor Agreements
- What If Your Contract Ends?
- Frequently Asked Questions
Are Consultants Entitled to Severance Pay?
Yes. Consultants can have severance or termination compensation rights, even when their agreements describe them as independent contractors.
There are three important legal classifications:
- Employee: You work as part of the company’s business and are entitled to employment-law protections, including termination compensation.
- Dependent contractor: You’re self-employed but rely heavily on one company for income. You can be owed reasonable notice or compensation when that relationship ends.
- Independent contractor: You operate your own business. Your termination rights depend primarily on your consulting agreement and contract law.
Your actual working relationship matters more than your job title, invoices or the wording of your contract.
Learn more about employees versus independent contractors.
How Much Severance Pay Can Consultants Receive?
Consultants who are legally employees can receive up to 24 months’ pay when terminated without cause. Their entitlement depends on factors including age, length of service, position, availability of comparable work and their employment contract.
Dependent contractors can also receive substantial compensation when a long-term relationship ends without adequate notice.
The amount depends on the length of the relationship, economic dependence, the nature of the work and the terms of the agreement.
True independent contractors don’t automatically receive employee severance. Their rights come primarily from the contract and applicable law.
See our guide to Dependent Contractor Rights and Severance Pay.
Does an Independent Contractor Agreement Eliminate Severance?
No. Calling someone an independent contractor doesn’t automatically eliminate their termination rights.
Consider how you actually worked:
- Did one company provide most or all of your income?
- Did you work for the same company for several years?
- Did the company control your schedule, duties and working conditions?
- Were you restricted from taking on other clients?
These factors help determine whether you’re an employee, dependent contractor or genuinely independent contractor.
Read more about Independent Contractor Rights in Canada.
What Happens When Your Consulting Contract Is Terminated?
If a company ends your consulting relationship, review the termination provisions before accepting its decision or signing a release.
A consultant who is legally an employee or dependent contractor can have rights beyond those described in the agreement.
Keep copies of your consulting contracts, invoices, payment records and communications with the company. These documents help establish your working relationship and compensation entitlement.
⚠️ Contract Terminated? Don’t sign a release or accept that you’re owed nothing simply because the company calls you a consultant. Have your legal status and termination rights reviewed first.
Consultant Severance Pay: Frequently Asked Questions
Can Self-Employed Consultants Get Severance?
Yes. Self-employed consultants who are economically dependent on one company can qualify as dependent contractors and receive reasonable notice or compensation when the relationship ends.
Does Incorporating Mean I’m Not Entitled to Severance?
No. Incorporating doesn’t automatically determine your legal status. Your agreement, business structure and actual working relationship all matter.
Can a Company Terminate a Consultant Without Notice?
The notice required depends on the consultant’s legal status, contract and circumstances. Employees and dependent contractors have protections that go beyond those of genuinely independent businesses.
Can Long-Term Consultants Receive Severance?
Yes. Long-term consultants who are employees or dependent contractors can be owed significant compensation when their working relationship ends.
Consulting Contract Ended? Find Out What You’re Owed
If you’ve lost a long-term consulting position, don’t assume the company can end your contract without compensation.
The employment lawyers at Samfiru Tumarkin LLP help consultants in Ontario, Alberta and British Columbia determine their legal status and recover compensation they’re owed.
Before you sign, always check first.