For many employees in Ontario, turning 50, 60, or 65 brings a mixture of excitement and anxiety about the future. Unfortunately, a pervasive myth exists in the workplace: many people believe that once you reach “retirement age,” you are no longer entitled to severance pay if your job ends.
This is entirely false. In Ontario employment law, your age is actually one of your greatest assets when it comes to compensation. Age strengthens your severance claim, it does not weaken it. If you are an older employee who has been let go, or if your employer is suddenly pressuring you to “retire” after decades of loyal service, you need to understand exactly how the law protects you before you sign any paperwork.
Employers often try to frame a termination as a “mutually agreed retirement” to avoid paying you the massive severance package you are legally owed. Before you sign any exit agreement, have an Ontario employment lawyer at Samfiru Tumarkin LLP review it.
On This Page:
- 1. Severance When You Retire
- 2. Forced to Retire
- 3. Age and Severance Pay
- 4. Typical Severance Offers
- 5. Pension and Benefits
- 6. How to Get What You’re Owed
Do You Get Severance Pay When You Retire in Ontario?
Whether or not you receive a severance package when you transition out of the workforce depends entirely on who is making the decision.
1. Voluntary Retirement
If you independently decide that you are ready to stop working, hand in your resignation, and declare your retirement, you are not entitled to severance pay. Under the law, a voluntary retirement is treated the same as a voluntary resignation. Because you chose to end the employment relationship, the employer owes you no financial compensation beyond your final wages and accrued vacation pay.
2. Employer-Initiated Termination (Forced Retirement)
If your employer decides to end your job—even if they hand you a cake, throw a party, and call it “retirement”—you are legally entitled to full severance pay. It does not matter if you are 55, 65, or 75. If the employer severs the relationship without cause, they must pay you.
Can an Employer Force You to Retire in Ontario?
No. In Ontario, mandatory retirement is illegal. In 2006, the provincial government amended the Ontario Human Rights Code to eliminate the upper age limit of 65. This change made age-based retirement policies presumptively discriminatory. Your employer can’t set a “company retirement age” or force you to step down simply because you hit a specific birthday.
Recognizing “Quiet” Forced Retirement
Because employers know they can’t explicitly fire you for your age, they often resort to subtle tactics to push you out the door. This might include:
- Significantly reducing your hours or cutting your pay.
- Demoting you or stripping away your long-held responsibilities.
- Creating a toxic, unwelcoming work environment.
- Constantly asking you, “So, when are you planning on retiring?”
If your employer makes your working conditions intolerable to pressure you into leaving, this is known as constructive dismissal in Ontario. If you are forced to resign under these circumstances, the law treats it as a termination, meaning you are owed full severance pay—and potentially additional human rights damages for age discrimination.
How Age Increases Your Severance Pay
When you are fired without cause, the Ontario Employment Standards Act (ESA) only guarantees you a bare minimum payout. However, your true legal entitlement is based on common law severance.
Ontario law and judges calculate common law severance based on the Bardal factors, a set of legal principles designed to estimate how long it will take you to find a comparable new job.
When courts apply the Bardal factors to employees aged 50 and older, the severance payouts skyrocket for one simple reason: courts recognize that older workers face systemic ageism and significantly more difficulty finding new employment than a 30-year-old. Because of your age, you are legally entitled to a much longer financial “bridge.” When calculating your severance, we look at:
- Your Age: The older you are, the more severance you receive.
- Length of Service: Older employees often have decades of tenure. A 25-year employee is owed vastly more than a 5-year employee.
- Position and Specialization: Senior management or highly specialized roles take much longer to replace.
The 24-Month “Maximum” (And Exceptional Circumstances)
While common law severance generally caps out at 24 months of full pay, recent Ontario court decisions have awarded up to 26 months of severance in “exceptional circumstances.” These exceptional cases almost always involve older employees (often in their 60s) who have dedicated their entire adult lives to a single company and have limited prospects for re-employment.
Do the Math Before You Speak to HR
If you are an older employee who has just been let go, your employer will likely offer you a package based only on the strict minimums set by the ESA (which caps out at a combined 34 weeks). They will hope you sign the release before you realize that your age and tenure entitle you to a massive common law payout instead.
Protecting Your Pension and Benefits
For older employees, severance is not just about your base salary. When our lawyers negotiate your package, we ensure that your entire compensation structure is protected during your notice period. This includes:
- Pension Contributions: Your employer must continue making contributions to your pension plan for the duration of your common law notice period.
- Extended Health Benefits: Maintaining your health, dental, and life insurance benefits during your severance period is critical, especially as you age.
- Tax Optimization: Severance is taxable. We frequently negotiate to have severance payouts transferred directly into your RRSP as a retiring allowance, sheltering your money from immediate taxation.
Secure Your Financial Future Today
If you are an older worker who has been terminated, laid off, or pressured into retirement, the employment lawyers at Samfiru Tumarkin LLP are here to protect you.
Do not let an employer push you out the door with a fraction of what you need to bridge the gap to your pension. As Canada’s largest and most positively reviewed employee-side employment law firm, we have the leverage to turn minimum ESA offers into maximum common law payouts, securing the dignity and financial stability you have earned.
Over 99% of our employment cases are resolved quickly and successfully without ever going to court.
Contact Samfiru Tumarkin LLP Today
If you have lost your job, time is of the essence. Let us secure the compensation you deserve.