Severance Pay in Ontario (FAQ)

Ontario severance pay can mean one of three things: (1) “statutory Ontario severance pay”, (2) “common law Ontario severance pay” and (3) “severance pay according to your employment contract”.

How much severance pay in Ontario am I entitled to?

The amount of Ontario severance you are entitled to depends on which kind of severance applies to you – (1) statutory Ontario severance pay, (2) common law Ontario severance pay or (3) severance pay according to your employment contract.

How do I know which kind of severance pay in Ontario applies to me?

Check your employment contract for a termination clause. If you have a termination clause in your employment contract, there may be some kind of formula telling you how much severance you are entitled to, thus meaning you would be entitled to “severance pay according to your employment contract”. For example, the termination clause in your employment contract may state that you are limited to  “statutory Ontario severance pay” (1 week per year of service) or it may state that you are entitled to some formula like 2 weeks’ severance for every year of service.

If you do not have an employment contract or if you have an employment contract which does not contain a termination clause, then “common law Ontario severance pay” applies to you.

I have a termination clause. Is my termination clause enforceable?

Maybe not. Many termination clauses are not enforceable. Read our article on termination clauses for more information as to why your termination clause may not be enforceable.

But whats that about Statutory Ontario severance again?

Statutory Ontario severance is just a minimum. Like minimum wage, it only applies to you if you have an agreement with your employer that all you get upon termination is statutory severance. The statutory minimum is only there to ensure your employer offers you at least this amount.

If you do have an agreement with your employer limiting you to just statutory Ontario severance,  then you are entitled to just one week of severance for every year worked. Check the Ontario Ministry of Labour guide for more information here. You will not need a lawyer to get your statutory severance – the Ministry of Labour will take care of that for free. You only need an employment lawyer if you are seeking your entitlement to common law Ontario severance or severance according to some greater formula for severance contained in a termination clause in your employment contract. The Ministry of Labour cannot get you common law severance or greater severance as contained in a formula in a termination clause in your employment contract. 

So how much common law Ontario severance pay am I entitled to then?

If you are entitled to common law severance in Ontario (as most people are), you are able to receive far more severance than statutory severance.

Calculating common law severance in Ontario is an art, not a science. There is no formula that says you get something like one month of severance for every year worked. In fact you could be entitled to many months of severance for every year worked.

To calculate common law severance in Ontario, employment lawyers analyze certain factors that were articulated in a famous case called “Bardal“. These important Bardal factors that examine how much severance pay you are entitled to include:

• age;
• salary;
• position;
• years of service;
• experience, training and qualifications;
• the availability of similar employment; and
• any other special circumstances affecting your ability to find a comparable job.

We employment lawyers review each above-noted factor to determine how long it will take you to find comparable employment. For example, the older you are or the more money you make, the harder it will be to re-employ in a comparable job. Therefore, you would be entitled a large severance package if you were close to retirement age and made over $100,000. This is just one example, there are endless other ways to increase your entitlement to severance in Ontario.

Check out our infographic on the average severance pay in Ontario.

What if I haven’t been provided enough severance pay by my employer?

If you were offered a severance package that did not contain enough severance (or benefits or other pay like a bonus), then you have been “wrongfully dismissed”. You should consider hiring an employment lawyer at our employment and labour law firm who will negotiate more severance with your employer.

Click here to read more about wrongful dismissal.

I heard about something called “notice” or “pay in lieu of notice”. What is that?

Generally, “notice” is just another word for severance. Its basically the same thing. Read our guide to notice here.

I heard about something called “termination pay”. What is that?

Termination pay in Ontario is the same thing as common law severance pay. Call it whatver you like: severance, termination pay or pay in lieu of notice – its all the same thing. ‘Severance’ or ‘termination pay’ or ‘pay in lieu of notice’ is the amount of money you get when you are terminated from your employment. Thus, calculating termination pay is the exact same as calculating severance pay in Ontario. You dont get both common law severance pay and termination pay in Ontario because they both mean the same thing.

Can Dutton Employment Law advise me on my entitlement to severance pay in Ontario?

Yes! We will provide a free consultation to anyone terminated from work looking to review how much severance in Ontario they should receive. We have reviewed thousands of severance packages and have successfully increased severance for our clients, although past results do not equal future success.