Federally regulated employees can be entitled to both termination pay and statutory severance pay under the Canada Labour Code. These minimum payments do not necessarily represent your full severance package.
If you work for a bank, airline, telecommunications company or another federally regulated employer, your rights after losing your job can include additional compensation under your employment contract or common law. Eligible employees may also be able to challenge their dismissal through the federal unjust dismissal process.
Samfiru Tumarkin LLP helps non-unionized employees in Ontario, Alberta and British Columbia understand their federal severance rights and review an employer’s offer before signing.
⚠️ Received a severance offer from a federally regulated employer?
Check the full package before accepting it. An eligible unjust dismissal complaint normally must be filed within 90 days of dismissal. An employer’s signing deadline is separate from that legal deadline.
On This Page:
- 1. Does Federal Law Apply?
- 2. Termination Pay
- 3. Statutory Severance
- 4. Calculation Examples
- 5. Your Full Severance Package
- 6. Unjust Dismissal
- 7. Layoffs and Job Changes
- 8. What to Do Next
- 9. Common Questions
Who Is Covered by Federal Severance Pay Rules?
Federal termination and severance standards apply to employees covered by Part III of the Canada Labour Code. Coverage depends on the employer’s business and your employment relationship.
Common federally regulated workplaces include:
- Banks, including RBC, TD, Scotiabank, BMO and CIBC
- Airlines and airport operations
- Telecommunications and broadcasting
- Railways and trucking or bus services that cross provincial or international borders
- Certain shipping, port and pipeline operations
- Canada Post and most federal Crown corporations
A bank employee working in Toronto, Calgary or Vancouver can be federally regulated even though their workplace is in a province. A company operating across Canada is not automatically federally regulated.
Check our list of federally regulated employers. For other workplace rights, read our Canada Labour Code guide.
💡 Federal public servants have different rules.
Working for a federally regulated bank or airline is different from working for a federal government department. Part III’s termination and severance provisions do not apply to the federal public service. Public-service legislation, employment terms and collective agreements must be considered separately.
What if you are provincially regulated?
Use our guides to Ontario severance pay, Alberta severance pay or BC severance pay. Our severance pay Canada guide explains the broader framework.
Canada Labour Code Termination Pay and Notice
After at least three consecutive months of continuous employment, eligible employees are entitled to a minimum of two to eight weeks of termination notice or pay instead of notice.
The minimum increases with completed years of service. An employer can provide written working notice, wages in lieu of notice, or a combination.
| Continuous employment | Minimum notice or pay instead of notice |
|---|---|
| 3 months to less than 3 years | 2 weeks |
| 3 years to less than 4 years | 3 weeks |
| 4 years to less than 5 years | 4 weeks |
| 5 years to less than 6 years | 5 weeks |
| 6 years to less than 7 years | 6 weeks |
| 7 years to less than 8 years | 7 weeks |
| 8 years or more | 8 weeks |
These individual termination minimums are set out in section 230 of the Canada Labour Code. Exceptions can apply, including dismissal for just cause. The eight-week statutory maximum does not cap a larger contractual or common-law entitlement. Learn more about termination pay.
Working notice means you continue working until the termination date. Read our guide to working notice and severance.
How Is Statutory Federal Severance Pay Calculated?
After at least 12 consecutive months of continuous employment, an eligible employee whose employment is terminated is entitled to statutory severance equal to the greater of:
- Two days’ wages for each completed year of service; or
- Five days’ wages.
The calculation uses your regular wage rate and regular hours of work. This entitlement comes from section 235 of the Canada Labour Code.
Statutory severance is separate from termination notice or pay. Providing working notice does not, by itself, satisfy the statutory severance obligation.
Different circumstances can change eligibility. For example, statutory severance generally is not payable for a voluntary resignation, dismissal for just cause or a temporary layoff that does not legally constitute a termination.
Federal Termination and Severance Pay Examples
The examples below assume a regular five-day workweek, wages of $1,500 per week ($300 per day), termination without working notice and eligibility for both statutory payments.
| Completed years of service | Termination pay | Statutory severance | Combined minimum |
|---|---|---|---|
| 1 year | 2 weeks: $3,000 | 5 days: $1,500 | $4,500 |
| 5 years | 5 weeks: $7,500 | 10 days: $3,000 | $10,500 |
| 10 years | 8 weeks: $12,000 | 20 days: $6,000 | $18,000 |
These are gross statutory amounts before deductions. They exclude outstanding wages, vacation pay and any additional contractual, common-law or unjust dismissal compensation. Variable pay and irregular schedules require a separate assessment.
💡 A correct minimum calculation can still produce an inadequate offer.
An employer may calculate both statutory payments correctly while offering much less than your full legal entitlement.
Can Federally Regulated Employees Receive More Severance?
Yes. Many non-unionized employees can have contractual or common-law rights that exceed Canada Labour Code minimums. Reasonable notice can extend to many months, depending on the circumstances.
There is no automatic one-month-per-year formula. A review considers your age, length of service, position, availability of comparable employment and the terms of your employment contract.
A termination clause may limit additional compensation if it is enforceable. Signing a contract does not automatically make every termination clause valid.
What should your full package account for?
Depending on your contract, compensation plans and applicable notice period, a review may identify rights relating to:
- Salary or hourly wages
- Bonuses and commissions
- Health, dental and insurance benefits
- Pension or RRSP contributions
- Stock options, restricted share units and other equity
- Other regular compensation and allowances
Read more about bonuses and severance, stock options after termination and executive severance.
The Severance Pay Calculator provides an initial estimate. It does not replace a review of your offer or assess every federal complaint remedy.
Does Paying Severance Make a Federal Dismissal Lawful?
Not necessarily. Paying termination and statutory severance amounts does not remove an eligible employee’s unjust dismissal rights.
The federal unjust dismissal process generally covers employees who have at least 12 consecutive months of service, are not managers and are not covered by a collective agreement.
An eligible complaint can lead to reinstatement, compensation for lost earnings or other remedies. This is different from a claim focused on insufficient notice or severance.
The process has exceptions, including genuine layoffs caused by lack of work or the discontinuance of a function. The employer’s description of a dismissal does not settle whether an exception applies.
Managers may still have statutory, contractual or common-law severance rights even though they are excluded from the unjust dismissal process. Your actual duties matter when assessing managerial status.
Read our unjust dismissal guide for eligibility and remedies.
⚠️ The usual unjust dismissal deadline is 90 days.
Get advice promptly. Do not assume negotiations, an internal appeal or a request for more time to sign will pause the complaint deadline.
What if statutory payments are missing?
A federal monetary complaint can address unpaid termination or statutory severance amounts. The usual filing deadline is six months from the last day the employer was required to pay. A civil claim can involve a different deadline and broader compensation. The appropriate process should be assessed before you file.
Federal Layoffs, Restructuring and Constructive Dismissal
What if your job is eliminated?
A genuine restructuring can affect unjust dismissal eligibility, but it does not automatically remove termination and severance entitlements. Check your payments, contract and the circumstances of the job elimination.
What if the layoff is temporary?
Certain temporary layoffs do not count as terminations under federal standards. If the applicable conditions are no longer met, termination and severance obligations can arise. A layoff may also raise contractual or constructive dismissal issues; do not assume the word “temporary” settles your rights.
Read our layoff versus termination guide.
What if your employer cuts your pay or demotes you?
A substantial change imposed without your agreement can amount to constructive dismissal. Federal employees may have severance rights and, where eligible, an unjust dismissal complaint. Get advice before resigning or accepting the change.
What Should You Do After a Federal Termination?
- Confirm your jurisdiction. Identify whether Part III of the Canada Labour Code applies.
- Keep the offer unsigned until you understand it. A release can settle rights beyond the payments listed.
- Collect your documents. Keep your employment contract, termination letter, pay records, bonus and equity plans, and proposed release.
- Ask for the payment breakdown. Identify termination pay, statutory severance, vacation pay, other compensation and any working notice.
- Check legal deadlines promptly. Assess the 90-day unjust dismissal deadline and any other applicable filing limits.
- Have the whole package reviewed. Check your full entitlement and the terms you would be accepting.
An employer’s acceptance deadline does not determine when your legal rights expire. The offer may expire or change, however, so request time for a review and get advice promptly.
Federal Severance Pay: FAQs
Is federal severance pay capped at eight weeks?
No. Eight weeks is the maximum individual termination notice requirement under the Code. Statutory severance is calculated separately, and contractual or common-law compensation may exceed both minimums.
Does the five-year Ontario severance rule apply to bank employees?
No, if their employment is federally regulated. The federal statutory severance threshold is 12 consecutive months of continuous employment. Ontario’s separate statutory severance rules do not replace the federal rules simply because the bank employee works in Ontario.
Can you receive severance with less than one year of service?
You may qualify for termination notice or pay after three months even though you have not reached the 12-month statutory severance threshold. Contractual or common-law rights must also be assessed.
Does working notice replace statutory severance?
No. Working notice can satisfy some or all of the notice obligation. Eligible employees remain entitled to the separate statutory severance payment.
What if your employer says you were fired for cause?
An allegation of cause does not prove that no compensation is owed. The conduct, evidence and applicable legal standard should be reviewed. Eligible employees may also have unjust dismissal rights.
Can you negotiate a federal severance package?
Yes. Negotiations can address additional compensation, benefits, incentives and release terms. Read our guide to negotiating a severance package.
What if you are unionized?
Contact your union about statutory rights, your collective agreement and the grievance process. Samfiru Tumarkin LLP’s employment law team does not assist with unionized workplace disputes.
Check Your Federal Severance Package Before You Sign.
A package that meets Canada Labour Code minimums can still leave out compensation you are owed. Your contract, compensation plans, release and dismissal circumstances all deserve a review.
Samfiru Tumarkin LLP helps non-unionized employees in Ontario, Alberta and British Columbia assess offers from federally regulated employers and pursue the compensation they are owed.
Before you sign, always check first.
➡️ Have Your Severance Package Reviewed or call 1-855-821-5900.