Severance Pay in Ontario: How Much Are You Owed?

If you have been let go from your job in Ontario, you are likely wondering how much severance you are entitled to. The answer depends on two different legal frameworks — the Employment Standards Act, 2000 (ESA) and the common law — and the difference between them can be substantial. Many employees accept their employer's initial offer without realizing they may be entitled to significantly more.

ESA Minimums: Termination Pay and Severance Pay

The ESA provides two types of payments. Termination pay is one week per year of service, up to a maximum of 8 weeks. Severance pay under the ESA is a separate entitlement available to employees with 5 or more years of service whose employer has a payroll of $2.5 million or more — it provides one week per year of service up to 26 weeks. These are minimum entitlements and cannot be contracted out of.

Common Law Reasonable Notice: The Bigger Entitlement

Unless your employment contract contains a valid and enforceable termination clause that limits your entitlement to the ESA minimums, you are likely entitled to common law reasonable notice. This is almost always more generous than the ESA. Courts consider your age, length of service, the character of your employment (including seniority and specialization), and the availability of comparable employment. Common law notice periods can range from a few weeks for short-service junior employees to 24 months for long-service senior employees.

What Is Included in Your Severance Package?

Common law damages for wrongful dismissal typically include not just your base salary during the notice period, but also the value of lost benefits, bonus and incentive compensation you would have earned, pension contributions, car allowances, stock options, and other components of your total compensation. An employer's initial offer often includes only base salary and ignores these other elements.

Why You Should Not Sign Without Legal Advice

Employers often present a termination letter and release with a short deadline to sign. They may tell you the offer is generous or non-negotiable. In our experience, initial offers are frequently below what the law requires. Once you sign a release, it is nearly impossible to claim more. The cost of a legal consultation is small compared to the potential increase in your severance package.

Contact Us for a Severance Review

Ken Wise & Associates reviews severance packages and negotiates better outcomes for terminated employees. We can quickly assess whether your employer's offer is fair and advise you on your options. Contact us as soon as possible after receiving a termination package — time limits may apply.