How Much Severance Pay Should I Get In Ontario?

Severance pay is often the first concern for employees who lose their job. You may hear that colleagues with similar years of service received different severance pay, or you might see a wide range of estimates online. This can be confusing, especially when you are trying to understand what you are legally entitled to in Ontario.

In Ontario, “severance pay” can refer to several different concepts:

Statutory severance pay under the Employment Standards Act, 2000 (ESA) (primarily ss.63–65);
Common law notice (judge-made law), which often provides higher entitlements than ESA minimums; and
Severance packages offered by employers, which may or may not reflect full ESA and common law rights.

This article focuses on Ontario employment law and explains how severance is calculated, how ESA severance and termination pay work, how common law notice is assessed, and why people with similar jobs can receive different amounts.

For a detailed step-by-step guide to eligibility, see: Am I Entitled to Severance Pay in Ontario?

What “Severance Pay” Can Mean in Ontario

When employers and employees talk about “severance,” they may be referring to one or more of the following:

ESA severance pay – a specific entitlement for certain long-service employees under ESA ss.63–65 and the provincial guide to severance pay.
Common law severance – also called reasonable notice, based on court decisions and often more generous than ESA minimums.
Contractual severance – amounts set out in an employment contract or release, which may be higher or lower than common law notice depending on whether the clause is enforceable.

Understanding which of these applies to you is essential before deciding whether a severance offer is fair.

Statutory Severance Pay Under the ESA

Under ESA s.64(1)–(2), an employee is entitled to statutory severance pay only if all of the following conditions are met:

Your employment has been “severed”, as defined in ESA s.63(1) and s.64(2); and
You have been employed by the same employer for at least five years; and
Your employer meets one of these thresholds:
- Has a global payroll of at least $2.5 million (ESA s.64(1)(a)); or
- Has permanently closed all or part of its business and terminated 50 or more employees within a six-month period at the establishment (ESA s.64(1)(b)).

These ESA rules set the minimum severance that must be paid if you qualify. Many non-unionized employees are entitled to additional severance at common law based on their circumstances.

For more on ESA eligibility, see: Am I Entitled to Severance Pay in Ontario?

When Is Employment Considered “Severed”?

For severance purposes, employment is considered “severed” when any of the conditions in ESA s.63(1) apply. Employment is severed when an employer:

Dismisses or fires the employee;
Constructively dismisses the employee, and the employee resigns, see Constructive Dismissal in Ontario;
Lays the employee off for 35 weeks or more in any 52-week period (ESA s.63(1)(c));
Permanently closes the business (ESA s.63(1)(d)); or
Provides written notice of termination and the employee resigns during that notice period with at least two weeks’ notice (ESA s.63(1)(e)).

How ESA Severance Pay Is Calculated

If you qualify for ESA severance, the amount is calculated under ESA s.65 and the provincial guide to severance pay as:

One week of regular wages per completed year of employment, plus a pro-rated amount for any part year of service; and
Up to a maximum of 26 weeks of severance pay.

This ESA severance is in addition to any termination pay you may be owed under the ESA.

Severance Pay vs. Termination Pay in Ontario

Employees are often unsure about the difference between ESA severance pay and termination pay. They are separate entitlements under the ESA and are explained in the Ontario government’s guide to termination of employment.

Termination Pay (ESA)

Compensates you for the notice period you should have received when your job ended.
Is owed when your employer terminates your employment without providing sufficient working notice.
Under ESA s.57–61, most Ontario employees are entitled to up to 8 weeks of termination pay, depending on length of service.

Severance Pay (ESA)

Compensates long-service employees for the loss of their job and recognition of long service (ESA ss.63–65).
Is owed in addition to termination pay if the severance criteria in ESA s.64 are met.
Can be up to 26 weeks of pay under the ESA.

Combined, an employee who meets all ESA criteria may receive up to 34 weeks of ESA termination and severance pay (8 weeks’ termination + 26 weeks’ severance). These are minimum standards only. Many employees are entitled to additional common law severance that extends beyond ESA notice periods.

For a more detailed comparison see: Termination Pay vs Severance Pay in Ontario

Common Law Severance (Reasonable Notice)

Beyond ESA minimums, Ontario employees are often entitled to common law notice (sometimes called “common law severance”). This is based on decisions of the courts rather than the ESA.

At common law, there is no fixed mathematical formula, but courts typically consider factors first set out in Bardal v. Globe & Mail Ltd., such as:

Your age;
Your length of service;
Your position and responsibilities;
Your education, training, and experience;
The availability of comparable employment in the job market; and
Any special circumstances that make it harder to find new work (for example, economic downturns or being recruited away from secure employment).

In many cases, courts have awarded notice periods amounting to several months of pay, and in some circumstances up to 24 months or more (inclusive of ESA entitlements), depending on the facts and any enforceable contract terms.

Learn more here: Common Law Notice in Ontario

Example of Common Law Severance Above ESA Minimums

Courts sometimes award more than a simple “one month per year of service,” especially where the employee has limited experience or faces a difficult job market. For example, in a recent case reported on CanLII, an employee with approximately 4.5 months of service was awarded 5 months of pay in lieu of notice, plus compensation for lost benefits, given the specific circumstances of the case.

This illustrates that common law notice is highly fact-specific and often significantly higher than ESA minimums.

Why Similar Employees Can Receive Different Severance

Employees often compare their severance to that of co-workers or friends and are surprised by the differences. Several reasons can explain this, including:

Different contracts – one person may have a termination clause limiting them to ESA minimums, while another does not.
Different roles or responsibilities – senior, specialized, or managerial positions can attract longer notice periods.
Different ages and service lengths – longer service and older age often support a higher common law entitlement.
Job market conditions – difficulty in finding comparable work can increase reasonable notice.
Cause vs. no-cause allegations – employers sometimes assert “cause” to avoid paying severance, though true just cause is a high legal threshold.

Because of these variables, two people with similar years of service can receive very different severance packages.

What if Your Contract Limits Severance to ESA Minimums?

An employment contract may state that the employee is entitled only to the minimum entitlements under the ESA if dismissed without cause. Alternatively, a contract may provide for more than ESA minimums but less than typical common law notice.

A termination clause is not automatically enforceable. Courts may find such clauses invalid if they:

Provide less than ESA minimums in any scenario;
Fail to address benefits, bonuses, or other components of compensation; or
Are unclear, contradictory, or otherwise inconsistent with the ESA.

If a termination clause is found unenforceable, the employee may be entitled to common law notice instead of being restricted to ESA minimums. Monkhouse Law has written extensively on termination clauses and has successfully argued that certain clauses were unenforceable, resulting in higher severance awards for employees. For further reading, see:

What if You Were Told There Is “Cause” and No Severance?

Employers sometimes state that an employee was terminated “for cause” or “with cause” and therefore has no right to termination or severance pay. Under Ontario law, however, just-cause termination is a very high standard, reserved for serious misconduct that fundamentally damages the employment relationship.

Poor performance, minor mistakes, or a single incident rarely justify a true “for cause” dismissal. Even where there are performance concerns, employers are usually expected to use progressive discipline and provide warnings before terminating for cause.

For more information, see:

If your employer has alleged cause and offered little or no severance, it is important to get legal advice. In many cases, the allegation does not meet the legal threshold and employees remain entitled to severance.

How to Estimate Your Severance Pay

Estimating your full entitlement requires looking at ESA minimums, common law notice, and all components of your compensation. A proper calculation should consider:

ESA termination pay and ESA severance pay (if you qualify);
Your potential common law notice period;
Your salary, benefits, bonuses, commissions, and pension contributions; and
Any contractual terms that may limit or expand your rights.

You can start by using the Monkhouse Law tool for an estimate: Severance Pay Calculator Ontario

For more on how layoffs can affect your severance, see:

Note for Employees Outside Ontario

This article is based on Ontario employment law. Other provinces, territories, and federally regulated workplaces have their own rules about termination, severance pay, and notice. Monkhouse Law Employment Lawyers represents non-unionized employees in Ontario. If you work elsewhere in Canada, you should consult an employment lawyer licensed in your province or territory to understand your rights.

Speak With an Ontario Severance Lawyer

If you have been fired, laid off long-term, or offered a severance package, an employment lawyer can help you determine whether the offer reflects your full ESA and common law entitlements.

Monkhouse Law Employment Lawyers represents non-unionized employees across Ontario. Our team has helped thousands of employees secure fair severance packages through negotiation and, when necessary, litigation.

To see how courts have treated severance and dismissal claims, you can review our past results here: Notable Case Results

To discuss your situation before signing anything, contact us for a free 30-minute phone consultation.