In Ontario, employees who have lost their job may be entitled to severance pay. The Ontario Employment Standards Act, 2000 establishes that the minimum amount of severance you are entitled to be one week’s pay per year of employment if you have worked five years or more.
While most Ontario employees are covered by the Employment Standards Act, 2000, some employees are exempt from minimum statutory severance pay. Some exceptions may be federal employees or Canada Labour Code employees, construction employees, employees engaged in the on-site maintenance of buildings, structures, roads, sewers, pipelines, mains, tunnels or other works. However, even if certain categories of workers are not entitled to the statutory minimums, they may still be entitled to common law notice.
In this article, we explain the minimum entitlement to severance pay under the Ontario Employment Standards Act, 2000, how it differs from termination pay, and how employees may be entitled to more under their employment contract or common law.
To qualify for severance pay, your employment must be severed.
Severance pay is only available in Ontario where the employment relationship has been “severed”. What does this mean? In Ontario, employment is severed when an employer:
- Dismisses or fires the employee;
- Constructively dismisses the employee and the employee resigns;
- Lays the employee off for 34 weeks or more in any period of 52 consecutive weeks;
- Lays the employee off because the employer has closed the business; or,
- Gives the employee notice of termination, and the employee resigns during that notice period by giving their employer two weeks’ notice.
Severance pay is available in Ontario if you have worked for five years or more.
Having your employment severed is only the first step in being eligible for Ontario severance pay. To be entitled to severance pay in Ontario under the Employment Standards Act, 2000, you also must have:
Worked at least five years with the employer; and,
- Worked for an employer who has a global payroll of at least $2.5 million, or
- Has permanently closed their business and has fired at least 50 employees in total within a span of 6 months.
If these requirements are met, you will be entitled to Ontario severance pay.
Severance pay is one week’s pay for each year of service.
The Employment Standards Act, 2000 provides a formula for calculating how much Ontario severance pay you are owed. To put it simply, you are entitled to one week’s pay per year of service, up to a maximum of 26 weeks.
Severance pay and termination pay are not the same.
The Ontario Employment Standards Act, 2000 also provides “termination pay.” This is not the same as severance pay. Termination pay is owed to an employee who has been terminated and has not been asked to continue working during the appropriate notice period. Instead, the employer simply pays the employee termination pay and can fire them on the spot.
The amount of termination pay you are owed depends on how long you have worked for the employer. If you have worked more than three months but less than one year, you are owed one week of termination pay. If you have worked more than one year, but fewer than three years, you are owed two weeks of termination pay. The maximum amount of termination pay you can receive is 8 weeks, which is available to employees who have worked with the employer for eight years or more.
Therefore, the total combined amount of termination and severance pay you can receive in Ontario is 34 weeks’ pay.
The severance pay you are entitled to under the Employment Standards Act is the minimum, not the maximum.
The Employment Standards Act, 2000 sets out the minimum amount of severance pay you are owed, not the maximum. You may be entitled to much more under your employment contract or as common law notice. Learn more about Common Law Notice and Employment Standards Act.
If you have been terminated and would like to calculate the amount of notice you may be entitled to, please consider using the Monkhouse Law Severance Pay Calculator for an estimate.
If you are an employee who has been fired from your job, you may be entitled to much more severance pay in Ontario than your employer would lead you to believe. It is important that you speak to an employment lawyer to determine just how much severance you are owed, the amount could be significant.
Monkhouse Law is an employment law firm located in Toronto with a focus on workers’ issues. We offer a free 30-minute phone consultation. Give us a call at 416-907-9249 or fill out this quick form.
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