Navigating the complex world of employment termination can be challenging—especially when it comes to understanding the nuances of severance in Ontario. While many employees are familiar with statutory severance pay provided under the Employment Standards Act, common law severance can often offer significantly more compensation. In this post, we’ll explore what common law severance in Ontario is, how it differs from statutory severance, and what steps you can take if you believe you are entitled to a more generous package.
What Is Common Law Severance?
Common law severance, sometimes referred to as “reasonable notice” or “pay in lieu of notice” under common law, goes beyond the minimum statutory requirements. Unlike statutory severance—which sets out basic entitlements for termination pay—common law severance is determined by court precedents and takes into account a variety of factors, including:
- Length of Service: Longer tenure typically results in more extended notice periods.
- Age: Older employees might receive longer notice periods based on the likelihood of facing difficulty securing similar employment.
- Position and Level of Responsibility: Senior executives or specialized professionals often qualify for more generous severance due to their unique skills and higher salary levels.
- Availability of Similar Employment: The difficulty of finding comparable work can increase the severance period deemed “reasonable” by the courts.
Common law severance aims to provide compensation that better reflects the realities of the job market and the individual circumstances of each employee.
Statutory Severance vs. Common Law Severance in Ontario
Understanding the difference between statutory severance and common law severance is crucial for anyone navigating job termination in Ontario.
Statutory Severance
- Defined by Legislation: Statutory severance is strictly regulated by employment standards legislation. It outlines minimum requirements such as notice periods or termination pay.
- Formula-Based: The calculation is generally straightforward—for example, one week of pay per year of service for eligible employees.
- Eligibility Requirements: Not every employee qualifies under statutory guidelines. Statutory severance is typically applicable for those with a minimum period of employment and when the employer meets certain size criteria.
Common Law Severance
- Beyond the Minimum: Common law severance takes into account a broader range of factors and is not limited to the minimum requirements of statutory provisions.
- Negotiable: The terms of common law severance can often be negotiated, and many employees receive settlements that far exceed statutory minimums.
- Tailored Compensation: Factors such as age, role, and the difficulty of finding comparable work are weighed to arrive at a fair severance package.
- Legal Precedents: The amount and terms of common law severance have been shaped by decades of case law, offering a more customized approach to compensating employees.
How Is Common Law Severance Calculated?
Calculating common law severance in Ontario involves a more individualized assessment compared to the one-size-fits-all approach of statutory severance. Here are the key factors considered:
1. Length of Service
Longer service often results in a longer notice period. Courts have determined that employees with many years of service may be entitled to several months or even years of notice or compensation in lieu of notice.
2. Employee Age
Older employees might face greater challenges in re-entering the workforce. As such, courts may award longer severance periods to provide a more realistic period for job searching and retraining.
3. Role and Seniority
Executives or employees with highly specialized skills are generally awarded more extensive severance packages. This compensates for the unique challenges they might encounter in securing comparable employment.
4. Availability of Similar Employment
The current economic climate and industry conditions can affect the reasonable notice period. If similar employment is scarce, the severance package may be increased to reflect the difficulty of finding new work.
5. Contractual Provisions
Some employment contracts contain clauses that address termination and severance. However, if these provisions fall short of what is considered reasonable under common law, employees may be entitled to additional compensation.
Steps to Take If You Believe You’re Owed Common Law Severance
If you have been terminated and believe that the severance package offered by your employer does not meet common law standards, consider taking the following steps:
1. Review Your Employment Contract
Carefully examine your contract to understand what severance provisions were agreed upon. Look for any clauses that might limit or define the severance terms.
2. Gather Documentation
Collect all relevant documents, such as performance reviews, pay stubs, employment agreements, and any communications regarding your termination. This information can be crucial in assessing your case.
3. Seek Legal Advice
Consult an employment lawyer who specializes in severance in Ontario. A legal expert can help evaluate whether your severance package aligns with common law entitlements and advise on potential negotiations or legal claims.
4. Negotiate for a Better Package
Armed with legal guidance and documentation, consider negotiating with your employer for a package that more accurately reflects your common law entitlements. Often, employers are willing to negotiate rather than face the potential costs and uncertainties of litigation.
5. Consider Filing a Claim
If negotiations fail and you strongly believe your severance rights have been violated, you may need to pursue legal action. An employment lawyer can help you file a claim to seek the compensation you are entitled to under common law.
Frequently Asked Questions About Severance in Ontario
What is the main difference between statutory and common law severance?
Statutory severance is determined by employment standards legislation and provides minimum standards, whereas common law severance is based on judicial precedents and considers additional factors like age, role, and employment prospects, often resulting in a higher compensation amount.
Can common law severance be negotiated?
Yes, many common law severance packages are negotiated. Legal advice can be instrumental in securing a package that better reflects your unique circumstances and entitlements.
Who is most likely to benefit from common law severance?
Employees with long tenure, older age, high-level positions, or specialized skills are generally in a stronger position to claim common law severance, as the courts recognize the greater difficulty they might face in finding comparable employment.
What should I do if my employer offers only statutory severance?
If you believe the statutory severance does not adequately compensate for your circumstances, consult with an employment lawyer. They can assess whether you are entitled to additional compensation under common law and help guide you through the negotiation or legal process.
Conclusion
Understanding the differences between statutory and common law severance is essential for anyone facing termination in Ontario. While statutory guidelines provide a baseline for severance in Ontario, common law severance offers a more comprehensive approach by taking into account your unique situation and the challenges you might face in the job market.
If you’re navigating a termination or believe your severance package falls short of what you deserve, don’t hesitate to seek professional legal advice. Being informed about your rights is the first step toward ensuring that you receive fair and equitable treatment in your transition to new employment.
For more detailed information and personalized guidance on common law severance in Ontario, consider consulting with a trusted employment lawyer. Stay informed, stay empowered, and ensure you receive the compensation you deserve.
Disclaimer: This blog post is for informational purposes only and should not be considered legal advice. For personalized guidance, please consult a legal professional.

Jeff is a lawyer in Toronto who works for a technology startup. Jeff is a frequent lecturer on employment law and is the author of an employment law textbook and various trade journal articles. Jeff is interested in Canadian business, technology and law, and this blog is his platform to share his views and tips in those areas.