Fired in Ontario? Termination Pay, Severance Pay, and What You May Actually Be Owed

Losing a job is hard enough without a termination letter full of words that sound interchangeable but are not. “Termination pay,” “severance,” “notice” and “package” mean different things in Ontario law, and the difference can be worth months of income. Here is a plain-language guide to what you may be owed.

First: termination pay and severance pay are not the same thing

Under Ontario’s Employment Standards Act, 2000 (ESA), these are two separate entitlements with different rules. Termination pay stands in for advance notice that your job is ending. Severance pay is extra compensation for the loss of a long-standing job, and only some employees qualify. If you qualify for both, you get both.

Layered on top is the common law — judge-made rules about “reasonable notice,” which is usually where the larger number lives.

Step one: your ESA notice or termination pay

If you have been continuously employed for at least three months, your employer generally must give you written notice, pay in lieu of notice, or a combination. The amount depends on your length of employment:

• Less than 1 year: 1 week

• 1 to under 3 years: 2 weeks

• 3 to under 4 years: 3 weeks

• 4 to under 5 years: 4 weeks

• 5 to under 6 years: 5 weeks

• 6 to under 7 years: 6 weeks

• 7 to under 8 years: 7 weeks

• 8 years or more: 8 weeks

Eight weeks is the ESA ceiling, however long you worked. Points people often miss: during a statutory notice period your employer cannot cut your wage rate or change your terms of employment, and must keep funding your benefits. You also earn vacation pay on termination pay, which is due seven days after your employment ends or on your next regular pay day, whichever is later.

Special rules apply to a “mass termination” — 50 or more employees at one establishment within four weeks — where notice runs 8, 12 or 16 weeks depending on how many people are affected. Since November 27, 2025, those employees also get up to three unpaid, job-protected days of job seeking leave during the notice period.

Step two: severance pay, if you qualify

Statutory severance pay is a separate entitlement, and Ontario is unusual in having it. You qualify if your employment is severed, you worked for the employer five or more years, and either the employer has a global payroll of at least $2.5 million, or it severed 50 or more employees within six months because all or part of the business closed permanently.

The amount is one week of regular wages per completed year, pro-rated for a partial year, to a maximum of 26 weeks. A 12-year employee at a large employer would be looking at 8 weeks of termination pay plus about 12 weeks of severance — under the ESA alone.

Step three: the common law, which is often the bigger number

The ESA sets minimums, not maximums. Unless a valid written contract limits you to those minimums, you may be entitled to “reasonable notice” at common law, assessed case by case. The classic factors come from Bardal v. Globe & Mail Ltd., 1960 CanLII 294 (ON HCJ): the character of the employment, length of service, the employee’s age, and the availability of similar work given their experience, training and qualifications.

There is no formula, and rules of thumb like “one month per year of service” are a starting point rather than law. The practical point is that common law notice is often measured in months where the ESA gives weeks. You also have a duty to look for comparable work, and earnings from a new job during the notice period usually reduce what your former employer owes.

Why the wording of your contract matters more than people expect

Many employment contracts contain a clause capping what you get at the ESA minimum — but only a properly drafted clause works. In Waksdale v. Swegon North America Inc., 2020 ONCA 391, the Court of Appeal for Ontario held that termination provisions must be read as a whole: if any part violates the ESA — even a “termination for cause” clause the employer is not relying on — the whole termination scheme is unenforceable, and a severability clause will not save it. The employee then falls back on common law notice. It is worth having the clause read before assuming the number in your letter is the number.

Being laid off or pushed out can count too

A termination is not only a firing. Under the ESA, a temporary lay-off that runs past the statutory limits is treated as a termination. And if your employer significantly changes a fundamental term of your job without your agreement — a substantial pay cut, or a major change in position, hours or location — and you resign in response within a reasonable time, that can be a constructive dismissal, carrying the same entitlements. It is fact-specific and easy to get wrong, so get advice before resigning.

You have to choose: ESA claim or lawsuit — and mind the deadlines

You can file an employment standards claim with the Ministry of Labour, Immigration, Training and Skills Development, or sue for wrongful dismissal in court — but not both for the same termination. An ESA claim is free and needs no lawyer, but recovers only ESA minimums; a civil claim can pursue full common law notice. If you file an ESA claim and then decide to go to court, you must withdraw it within two weeks of filing.

Either way, there is a clock. An ESA claim generally must be filed within two years of the alleged violation, and a civil wrongful dismissal action is subject to the basic two-year limitation period under Ontario’s Limitations Act, 2002. Severance offers, meanwhile, usually come with a much shorter deadline of their own.

Practical first steps

• Do not sign a release on the spot. Most offers can be reviewed, and signing usually ends your ability to ask for more.

• Ask for the offer in writing, broken down into what is ESA minimum and what is additional.

• Dig out your employment contract, offer letter and any policies you signed.

• Apply for Employment Insurance and start job searching; mitigation matters, and so do the bills.

• If the timing seems connected to a leave, a complaint, a disability or a protected ground under the Human Rights Code, say so early — that changes the analysis.

Ken Wise & Associates practises in employment law, including wrongful dismissal and severance matters.

This article is general information only and is not legal advice. Reading it does not create a solicitor-client relationship. Every situation turns on its own facts — speak with a qualified Ontario lawyer or licensed paralegal about yours.