If you were fired, laid off, or let go in Ontario, your employer might give you a severance package and tell you it is a “standard” offer.
Do not assume that offer is fair.
In Ontario, most non-unionized employees who are fired without cause are owed compensation. Your employer may offer only the minimum amount required by the Employment Standards Act — often called the ESA — but many employees are entitled to significantly more under common law severance.
Before you sign a severance offer or release, make sure you understand the difference between ESA minimums and your full legal entitlements.
Quick Answer
Severance pay in Ontario is based on two main systems: ESA minimums and common law entitlements.
Under the ESA, eligible employees may receive termination pay, statutory severance pay, or both.
However, many non-unionized employees are also owed common law severance, also known as reasonable notice. This amount is often much higher than the ESA minimum and can reach up to 24 months of pay in some cases.
Your severance package can depend on:
- Your age
- Your length of service
- Your position
- Your income
- Your employment contract
- The availability of similar work
- Whether your employer has a valid termination clause
- Whether you were fired without cause
Do not sign a severance package until you know what you are actually owed.
On This Page:
- 1. What Does Severance Pay Mean?
- 2. ESA vs. Common Law
- 3. Employment Contract Impact on Severance
- 4. Calculating Common Law Severance
- 5. What’s in a Severance Package?
- 6. How Much Can You Get?
- 7. Who is Entitled to Severance?
- 8. Severance When You Quit
- 9. Steps After Getting an Offer
- 10. Get Legal Advice
What Does Severance Pay Mean in Ontario?
Most people use “severance pay” to describe the total amount an employee receives after losing their job.
Legally, Ontario separates these payments into different categories:
- ESA termination pay
- ESA severance pay
- Common law severance
These are not the same thing.
Your employer might use the word “severance” in a general way, but the amount offered may only reflect minimum standards. That is why it is important to review the full package before accepting it.
ESA Minimums vs. Common Law Severance
One of the biggest mistakes employees make is assuming the ESA minimum is the maximum amount they can receive.
It usually is not.
The ESA sets out minimum termination and severance rules in Ontario. These are the lowest amounts your employer may have to provide.
Common law severance is different. It is based on what Ontario courts consider reasonable in your situation. For many non-unionized employees, common law severance is much higher than the ESA minimum.
The Three Layers of Severance in Ontario
| Type of payment | Who may qualify | How much can it provide? | Key point |
|---|---|---|---|
| ESA termination pay | Most employees after at least 3 months of employment | Up to 8 weeks | This is a minimum standard |
| ESA severance pay | Employees with 5+ years of service whose employer meets the payroll or mass termination rules | Up to 26 weeks | This is separate from termination pay |
| Common law severance | Many non-unionized employees | Up to 24 months in some cases | This is often much higher than ESA minimums |
ESA Termination Pay in Ontario
ESA termination pay is the minimum amount your employer must provide if they end your employment without giving you enough working notice.
In Ontario, employees who have worked for at least three months are generally entitled to written notice of termination or termination pay.
Termination pay is based on length of service and is capped at eight weeks under the ESA.
This is only the legal minimum. Many employees are owed more under common law.
ESA Severance Pay in Ontario
ESA severance pay is different from termination pay.
To qualify for ESA severance pay, you generally need to meet two conditions:
- You have worked for your employer for at least five years.
- Your employer has a global payroll of at least $2.5 million, or the employer severed the employment of 50 or more employees in a six-month period because all or part of the business permanently closed.
If you qualify, ESA severance pay is calculated as one week of regular wages for each completed year of service, plus a prorated amount for completed months in a partial year.
ESA severance pay is capped at 26 weeks.
Combined, ESA termination pay and ESA severance pay can provide up to 34 weeks of minimum compensation.
But this still might not be your full entitlement.
Common Law Severance in Ontario
Common law severance is the amount of reasonable notice or pay in lieu of notice that a non-unionized employee may be owed after being fired without cause.
This is where many employees receive far more than the ESA minimum.
Common law severance is designed to compensate you for the time it should reasonably take to find comparable new work.
In some cases, common law severance can reach up to 24 months of pay.
However, your employer may try to limit you to ESA minimums through an employment contract. Whether that contract is enforceable depends on the wording of the termination clause.
Can an Employment Contract Limit Severance Pay?
Yes, but only if the termination clause is legally enforceable.
Some employment contracts try to limit employees to ESA minimums. If the termination clause is valid, it may reduce the amount of severance you can claim.
But many termination clauses are poorly written, outdated, or legally unenforceable.
How is Common Law Severance Calculated?
There is no automatic “one week per year of service” rule for common law severance.
Ontario courts often consider the Bardal factors when deciding how much reasonable notice an employee should receive.
The main factors include:
- Age: Older employees may be owed more because it can be harder to find comparable work.
- Length of service: Long-service employees usually receive more severance than short-service employees.
- Position and responsibilities: Managers, executives, specialized employees, and senior workers may be owed more.
- Availability of similar work: If comparable jobs are limited, severance should reflect the time needed to find new employment.
Your severance should also reflect your full compensation package, not just your base salary.
What Should Be Included in a Severance Package?
A proper severance package should account for your full compensation.
Depending on your job, this can include:
- salary or wages
- bonuses
- commissions
- vacation pay
- benefits
- pension contributions
- RRSP matching
- stock options or equity
- car allowance
- phone allowance
- other regular compensation
How Much Severance Pay Can You Get in Ontario?
The amount depends on your specific situation.
- A short-service employee may still be owed several months of pay, depending on age, role, contract language, and job market.
- A long-service manager may be owed much more than ESA minimums.
- An older employee with decades of service could be owed close to the upper range of common law severance.
- An executive may be owed compensation for bonuses, equity, stock options, and long-term incentive plans.
Who is Entitled to Severance Pay in Ontario?
Most non-unionized employees in Ontario are entitled to compensation if they are fired without cause.
This can include:
- full-time employees
- part-time employees
- hourly employees
- salaried employees
- managers
- executives
- commissioned employees
- employees on probation
- older employees
- short-service employees
- long-service employees
- workers misclassified as independent contractors
Who May Not Qualify for ESA Severance Pay?
Not every employee qualifies for ESA severance pay under the ESA.
You might not qualify for ESA severance pay if:
- you worked for the employer for less than five years
- your employer does not meet the ESA payroll or mass termination rules
- you are unionized
- you are federally regulated
- you fall under a specific ESA exemption
- your employer can prove wilful misconduct that meets the ESA standard
But this does not automatically mean you have no rights.
Even if you do not qualify for ESA severance pay, you may still be owed ESA termination pay or common law severance.
Do Hourly Employees Get Severance Pay?
Yes. Hourly employees in Ontario can be entitled to severance pay.
Your rights are not based on whether you are paid hourly or by salary. They depend on your employment status, length of service, contract, and how your job ended.
Can Older Employees Get More Severance?
Often, yes. Age is one of the key factors used to calculate common law severance. Older employees may receive larger packages because it can be harder to find comparable work later in a career. Employers also can’t force you to retire because of your age.
Do Executives Get Larger Severance Packages?
Executives and senior leaders often have more complex severance claims because their compensation usually goes beyond base salary.
A proper executive severance package may need to account for bonuses, stock options, RSUs, PSUs, long-term incentive plans, pension contributions, car allowances, and executive benefits.
Can You Get Severance If You Quit?
Usually, employees who voluntarily resign are not entitled to severance pay.
However, you may still be owed severance if your resignation was actually a constructive dismissal. This can happen when your employer makes major unwanted changes to your job or creates working conditions that leave you with no reasonable choice but to resign.
Can You Get Severance If You Were Fired For Cause?
If your employer can prove just cause, you may lose your right to severance.
But true just cause is difficult to prove. Employers often claim cause for poor performance, minor mistakes, missed targets, lateness, or disagreements with management — event hese situations often do not justify firing someone without severance.
What is Working Notice?
Working notice is when your employer tells you that your employment will end on a future date and requires you to continue working until then.
Working notice can be legal if your employer maintains your pay, benefits, duties, and core employment terms during the notice period.
Lump Sum, Salary Continuance, Taxes, and EI
Severance packages are often paid as a lump sum or through salary continuance.
Both options can affect taxes, benefits, Employment Insurance, and what happens if you find a new job quickly. The structure of the package can matter almost as much as the total amount offered.
How Long Do You Have to Claim Severance in Ontario?
In many wrongful dismissal Ontario cases, employees have up to two years to start a legal claim.
This is different from the short deadline your employer might put on a severance offer.
An employer may say the offer expires in a few days. That does not mean your legal rights disappear at that time.
However, waiting too long can hurt your claim. Speak with an employment lawyer before making a decision.
What Should You Do After Receiving a Severance Offer?
If you receive a severance package, take these steps:
- Do not sign immediately. You do not have to accept the first offer on the spot.
- Do not rely on HR’s deadline. Employers often use short deadlines to pressure employees.
- Save everything. Keep your offer, contract, termination letter, bonus plan, benefit documents, and recent pay records.
- Use the Severance Pay Calculator. Get a quick estimate of what you may be owed.
- Get legal advice before negotiating. If the offer is too low, negotiating on your own can hurt your case.
Why Choose Samfiru Tumarkin LLP?
Samfiru Tumarkin LLP is Canada’s largest employee-side employment law firm. Our Ontario employment lawyers help non-unionized employees review, negotiate, and improve severance packages.
We have helped tens of thousands of employees across Canada understand their rights and secure the compensation they are owed.
Our severance pay lawyers help employees across Ontario, including Toronto, Ottawa, Hamilton, Mississauga, Brampton, Vaughan, Markham, London, Kitchener, Waterloo, Barrie, Windsor, and surrounding communities.
If your employer offered you only the ESA minimum, your severance package may be far too low.
Get Your Severance Package Reviewed
Do not let your employer decide what your job loss is worth.
Before you sign a severance offer, contact Samfiru Tumarkin LLP. Our Ontario employment lawyers can review your package, explain your rights, and help you pursue the compensation you are owed.