Termination pay is money an employer pays instead of giving some or all of the notice required when ending your employment. Often called pay in lieu of notice, it replaces earnings for the notice period you do not work.

There is no single termination-pay formula for everyone in Canada. The rules depend on your province or federal jurisdiction, your length of service and the circumstances of your dismissal.

The minimum payment may be only part of what you are owed. Many non-unionized employees have additional contractual or common law rights that can make their full termination package substantially larger.

Samfiru Tumarkin LLP helps non-unionized employees in Ontario, Alberta and British Columbia understand their termination packages and pursue the compensation they are entitled to.

⚠️ Offered termination pay? Check the full package before signing. An offer that meets minimum employment standards does not necessarily satisfy all your rights. Before you sign, always check first.

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What Is Termination Pay?

When an employer ends an eligible employee’s job, it generally must provide advance notice, payment instead of notice, or a combination of both.

  • Working notice: You receive notice of a future end date and continue working and receiving pay during that period.
  • Termination pay: Your employment ends without all the required working notice, and the employer pays for the remaining notice obligation.
  • A combination: You work through part of the notice period and receive payment for the rest.

The phrase “termination pay” often refers to the minimum payment required by employment standards legislation. Your employer may use it more broadly in a termination letter, so check what the amount actually covers.

💡 The label does not determine your entitlement. Calling an offer “termination pay,” “severance” or a “separation package” does not establish whether it is enough.

Which Termination Pay Rules Apply to You?

Most employees fall under provincial or territorial employment standards. Employees in federally regulated industries, such as banking, airlines and telecommunications, are covered by federal labour standards.

A company does not become federally regulated simply because it operates across Canada. Its industry and operations determine the applicable framework.

Ontario

Ontario’s Employment Standards Act provides minimum termination notice or pay for eligible employees. Some employees also qualify for a separate statutory severance payment. Read our guide to termination pay vs. severance pay in Ontario.

Alberta

Alberta’s Employment Standards Code sets minimum notice and termination-pay requirements. Your length of service affects the minimum notice period. See our Alberta termination pay guide for the service-based schedule and local rules.

British Columbia

BC’s Employment Standards Act uses the term “compensation for length of service.” Eligible employees receive notice, compensation or a combination. Our BC severance pay guide explains the minimums and potential additional entitlements.

Federally regulated employees

The Canada Labour Code provides minimum individual termination notice or pay, plus a separate statutory severance entitlement for qualifying employees. Read our federal and Canadian severance pay guide for the detailed rules.

Other provinces have their own requirements. Do not apply an Ontario or Alberta calculation to a job covered by another jurisdiction.

Is Termination Pay the Same as Severance Pay?

People often use the terms interchangeably, but they can refer to different things:

  • Minimum termination pay: Payment replacing the notice required under employment standards legislation.
  • Statutory severance pay: A separate legal entitlement in some jurisdictions, including Ontario and the federal system, when the eligibility requirements are met.
  • A full severance package: The broader compensation provided when employment ends, which may reflect contractual or common law rights beyond statutory minimums.

These amounts are not simply added together in every case. Statutory payments generally count toward overlapping compensation owed for the same period. A proper review checks the total entitlement and avoids both missing amounts and double-counting.

Do not assume “we paid the legal minimum” means your employer has paid everything it owes you.

How Is Termination Pay Calculated?

A minimum termination-pay calculation generally involves three steps:

  1. Identify the applicable law. Confirm whether provincial, territorial or federal rules govern your job.
  2. Determine the notice obligation. Check your recognized length of service, any valid working notice already provided and relevant exceptions.
  3. Calculate the required pay. Apply the jurisdiction’s wage-calculation rules and check related obligations, such as benefits and vacation pay.

A simple example

Assume an employee is owed four weeks of minimum notice, receives none and has applicable weekly wages of $1,200. The wage component of termination pay would be $4,800 before deductions. If two weeks of valid working notice had been provided, the remaining wage component would be $2,400.

This illustration does not determine the employee’s full package. Additional benefits, vacation pay, statutory severance or contractual and common law entitlements may still need to be assessed.

Why your full entitlement may be higher

For many non-unionized employees, common law reasonable notice depends on factors such as age, service, the nature of the job and the availability of comparable work. An enforceable employment contract can affect that entitlement. You could be owed as much as 24 months’ pay.

There is no universal “one week per year” or “one month per year” rule. Use our Severance Pay Calculator for an initial estimate, then have your contract and offer reviewed.

Who Qualifies for Termination Pay?

Many employees qualify when their employer ends their employment without enough notice. Eligibility depends on the applicable legislation, service requirements and any exceptions.

A resignation, expiry of certain fixed-term arrangements or qualifying misconduct can affect entitlement. Some occupations also have special rules. A statutory exception does not always eliminate separate contractual or common law rights.

What if your employer says it has cause?

The employer’s label is not conclusive. Alleged poor performance or a workplace mistake does not automatically remove your rights. Statutory exceptions and common law just cause can also involve different tests, particularly in Ontario. Have the reason for withholding payment reviewed.

Learn more about being fired for cause.

What if you were forced to resign?

A major, unauthorized change to your job or a seriously harmful work environment can raise constructive dismissal issues. Get advice before quitting so you understand how to protect any claim.

Explore our guide on force resignation in Canada.

What to Check Before Accepting Termination Pay

  • Your service: Is the employer using the correct start date and recognizing relevant prior service?
  • Your compensation: Has the review addressed salary, commissions, bonuses, benefits and other relevant entitlements?
  • Your contract: Is the termination clause enforceable, and does it actually limit your rights?
  • The payment conditions: Which amounts are owed regardless of signing, and which are offered in exchange for a release?
  • Other workplace issues: Did discrimination, a medical leave or retaliation play a role in your dismissal?
⚠️ Your employer’s signing deadline is not the deadline for enforcing your legal rights. The employer may put an expiry date on its offer, but that does not erase your entitlements. Get advice promptly before deciding whether to accept.

Termination Pay: Frequently Asked Questions

Do I have to sign a release to receive minimum termination pay?

An employer can’t make payment of statutory minimum amounts you are already entitled to conditional on signing away your rights. Additional settlement money may come with a release, which should always be reviewed before you accept.

Is termination pay separate from my final wages?

Yes. Wages already earned are different from compensation for missing notice. Your final accounting should also address outstanding vacation pay and any other amounts due.

When must termination pay be paid?

Payment deadlines vary by jurisdiction. There is no single Canada-wide deadline. Use the relevant guide above, and do not assume an employer can delay statutory payments until you accept its settlement offer.

Is termination pay taxable?

Yes. Termination payments are generally taxable, and payroll deductions depend on how the payment is classified. Compare the gross offer with your gross entitlement rather than treating the amount deposited into your account as the whole package.

Can a short-service employee receive more than the minimum?

Yes. A short period of employment does not automatically limit every entitlement to the statutory minimum. Your contract and the circumstances relevant to reasonable notice can make a significant difference. Learn more about severance for short service employees.

What if I am unionized?

Speak with your union promptly about your collective agreement, grievance rights and deadlines. Our employment law services are for non-unionized employees only.

Find Out Whether Your Termination Package Is Enough

You do not need to work out every legal category yourself. Send us your termination letter, employment contract and proposed release. We can explain what you have been offered, what may be missing and your options for pursuing more.

The employment lawyers at Samfiru Tumarkin LLP help non-unionized employees in Ontario, Alberta and BC review termination packages and pursue the compensation they are owed.

Get your termination package reviewed.
Request a case evaluation from our employment law team or call 1-855-821-5900.

Is Your Termination Package Enough?

The minimum may be only part of what you’re owed. Our employment lawyers help non-unionized employees in Ontario, Alberta and BC understand their full entitlement.

Get My Package Reviewed

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