When your job ends in Ontario, you may be entitled to severance pay—a type of compensation that helps you financially while you transition to new employment. Here’s a complete guide to understanding severance pay under Ontario’s Employment Standards Act (ESA), how it’s calculated, and your potential entitlements under common law.
Want a quick overview on severance pay? Watch the video below or check out the full episode in our TV section.
Table of Contents
2. Who Is Entitled to Severance Pay?
3. Severance Pay Under the ESA
4. Ontario Severance Pay Chart (2025)
5. How Is Severance Pay Calculated
6. Maximum Severance Pay in Ontario
7. How Employment Contracts Affect Severance
8. Federally Regulated Employees & Severance
9. FAQ
10. More Resources
11. Get Severance Pay
What is Severance Pay in Ontario?
Severance pay is a form of compensation provided to long-serving employees in Ontario when their employment is terminated without cause. It’s designed to support you financially as you look for new work. Severance pay is not the same as termination pay, which is a separate form of compensation provided when advance notice of termination isn’t given. Learn more about the differences between termination and severance pay here.
Who is Entitled to Severance Pay in Ontario?
Understanding who qualifies for severance pay in Ontario involves two key areas: the minimum entitlements under the Employment Standards Act (ESA) and often more significant entitlements under common law.
ESA Severance Pay: Minimum Entitlements
To be eligible for statutory severance pay under the ESA, you must meet specific conditions when your employment is terminated without cause:
- Length of Service: You must have been employed by your employer for at least five years.
- Employer’s Payroll Size or Mass Layoff: You must also meet one of the following criteria:
- Your employer has a global payroll of $2.5 million or more, OR
- Your termination is part of a layoff where 50 or more employees are terminated within a six-month period due to a permanent business closure.
If these conditions are met, your employer is legally obligated to provide severance pay in addition to any termination pay owed under the ESA.
Common Law Severance: Broader Eligibility & Higher Compensation
It’s crucial to understand that most non-unionized employees in Ontario are entitled to significantly more severance pay under common law, regardless of whether they meet the strict ESA thresholds. Unlike the ESA, common law does not typically have minimum service requirements or employer payroll size criteria for eligibility.
Under common law, your entitlement to severance pay is based on factors such as your age, position, length of service, and the availability of similar employment. This can result in compensation equivalent to several months, and sometimes even up to 24 months’ pay, far exceeding the ESA maximums.
If you’ve lost your job in Ontario, it is highly recommended to consult with an experienced employment lawyer at Samfiru Tumarkin LLP to understand your full entitlements under both the ESA and common law, as your common law rights are often much greater.
Severance pay is one week’s pay per year of service in Ontario
Under the Employment Standards Act (ESA), severance pay in Ontario is one week’s regular wages for each full year you’ve worked, up to a maximum of 26 weeks.
But this is only the minimum. Most employees are actually owed much more under common law severance — as much as 24 months’ pay.
- Factors like age, position, length of service, availability of comparable work, bonus, benefits, commission and vacation pay are considered when building a full severance package.
Example Calculation
If you’ve worked for 10 years and meet the ESA conditions, you would be entitled to at least 10 weeks of severance pay. However, depending on your role and circumstances, you might receive up to 24 months of pay under common law.
Use our Severance Pay Calculator to see a personalized estimate of your severance entitlements.
Ontario Severance Pay Chart (2025 Update)
Here is the 2025 Severance Pay Chart for Ontario. It shows how many weeks of severance you’re owed under the ESA, based on your years of service. Many employees are entitled to much more under common law.
| Years of Service | Notice Period (Minimum ESA) | Severance Pay |
|---|---|---|
| Less than 1 year | 1 week | None |
| 1 year | 2 weeks | None |
| 2 years | 2 weeks | None |
| 3 years | 3 weeks | None |
| 4 years | 4 weeks | None |
| 5 years | 5 weeks | 5 weeks |
| 6 years | 6 weeks | 6 weeks |
| 7 years | 7 weeks | 7 weeks |
| 8 years or more | 8 weeks | Up to 26 weeks, based on length of service |
How Severance Pay is Calculated in Ontario
Severance pay is typically calculated based on your regular weekly wages and years of service. The formula under the ESA is as follows:
- Severance Pay Formula: Regular weekly wages × Years of service = Severance Pay
For example, if you worked with the same employer for 10 years and earned $1,000 per week, your severance pay would be $10,000. Note that severance pay under the ESA is capped at a maximum of 26 weeks.
Maximum Severance Pay: How you may be entitled to much more
If your employment contract doesn’t limit your severance pay to ESA minimums, you may be entitled to common law severance—which often results in significantly higher compensation. Under common law, your severance pay could be up to 24 months’ pay depending on factors such as:
- Age: Older employees generally receive longer notice periods, as finding a new job can be more challenging.
- Position and Salary: High-responsibility roles or specialized skills may increase severance pay entitlements.
- Length of Service: The longer your employment, the more severance pay you may qualify for.
- Difficulty finding similar employment
Example: A 57-year-old manager with 20 years of service might be eligible for up to 24 months of severance pay under common law. This amount can be substantial, especially if finding a comparable job will be difficult.
Additionally, Employees with short service of three years or less are treated disproportionately better than long-term employees when it comes to severance.
If you’re unsure of what you might be entitled to, reach out to an Ontario employment lawyer at Samfiru Tumarkin LLP to ensure you receive the full compensation you deserve. We proudly serve clients across the province — including those looking for an employment lawyer Toronto or Ottawa employment lawyer workers trust.
How Employment Contracts Affect Severance Pay
Your employment contract can influence your severance entitlements. Contracts often contain clauses that aim to limit severance pay to ESA minimums, but these clauses must meet strict legal standards. If the termination clause in your contract is ambiguous or doesn’t comply with ESA standards, it may not be enforceable. In such cases, you could be entitled to full severance pay under common law.
How it works for Federally Regulated Employees
Federally regulated employees, such as those working in banking, telecommunications, and transportation, are governed by the Canada Labour Code rather than the ESA. Severance pay entitlements can differ under federal rules. If you work in a federally regulated industry, our team can help clarify your unique severance entitlements.
Frequently Asked Questions
Here are common questions we get about severance pay in Ontario:
Am I guaranteed severance pay under Ontario law?
You are entitled to severance pay if you meet the ESA’s criteria (five years of service and payroll size) or if common law severance applies due to the terms of your employment.
Is there a severance pay chart for Ontario?
Yes. The chart above summarizes your minimum entitlements under the ESA. It’s important to note that common law severance could entitle you to much more compensation.
Is severance pay mandatory in Ontario?
Yes, severance pay is mandatory in Ontario when an employee is let go without cause. Employers are legally required to provide compensation to eligible employees when terminating their employment. The amount depends on various factors, but the obligation to provide severance remains.
What other times can I get severance in Ontario?
There are other situations besides a termination without cause when you should receive a severance package, including:
- Incorrectly terminated “for cause”
- Constructive dismissal (e.g., major changes to your job that lead you to resign)
- Temporary layoff for an extended period
- Layoff due to the closure of your employer’s business
- Resignation during a notice period (with two weeks’ notice)
Can I ask for severance months after being let go?
Yes, you can request severance up to two years after being let go. This two-year period, known as the time limit to pursue severance, allows you to explore your options. It’s essential to avoid signing any termination documents before consulting an employment lawyer at Samfiru Tumarkin LLP to protect your rights.
Should I use the Ministry of Labour to get severance pay?
No – if you’re seeking full severance pay under common law, you should avoid filing a claim through the Ministry of Labour. The Ministry can only help with the minimum amounts set out in Ontario’s Employment Standards Act (ESA).
Once you file a claim with the Ministry, you are legally barred from pursuing a separate claim through an employment lawyer – even if you’re owed much more.
To protect your rights and maximize your compensation, speak to our team before you sign or file anything.
How is severance pay typically paid out in Ontario?
Severance can be paid in three ways:
- Lump-sum payment (one-time)
- Salary continuance (continued regular pay)
- Installments (spread out over time)
Is severance pay taxable in Ontario?
Yes, severance pay is generally considered taxable income in Ontario. The way it’s taxed depends on how it’s structured (e.g. lump sum vs. salary continuance), and there are ways to reduce or defer taxes in certain cases.
Can I get severance pay if I’m on long-term disability?
Yes, you can receive severance pay if you lose your job while on long-term disability in Ontario. Learn more in our blog on severance packages and long-term disability.
More Resources on Severance Pay
- Do hourly employees get severance pay in Ontario?
- Wrongful dismissal in Ontario
- Mass layoffs in Ontario: Rights to severance
- Severance pay by company
- Severance pay in the construction industry
Get the compensation you deserve
At Samfiru Tumarkin LLP, we’ve successfully represented thousands of non-unionized employees across Ontario, securing millions of dollars in compensation for those facing workplace issues. Whether you’re negotiating a severance package, dealing with a wrongful dismissal, or navigating other employment challenges, our team is here to fight for your rights.
We offer expert legal advice on a wide range of employment issues, from severance pay disputes to workplace harassment, and everything in between—including disability claims and personal injury matters outside the work environment. Our dedicated lawyers will ensure you get the full compensation you’re entitled to.
Don’t leave your future in your employer’s hands—put it in ours. Find out why were chosen as one of Canada’s Best Law Firms in 2024 by The Globe and Mail. Contact us today or call 1-855-821-5900 for a consultation, and take the first step toward protecting your rights and securing your financial future.
Explore more resources on employment law by visiting our For Employees and Law Essentials service pages, and discover how we can help you resolve your workplace issues.
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