If you’ve been terminated without cause in Ontario, you may be entitled to termination pay, severance pay, or both under the Employment Standards Act, 2000 (ESA).In many cases, employees may also be entitled to common law reasonable notice (often referred to as “severance”), which can be significantly more than ESA minimums.
Request a Consultation | Use the Severance Calculator
Monkhouse Law Employment Lawyers assists non-union employees only.
Quick Summary
- Termination pay is ESA notice or pay in lieu of notice, generally up to 8 weeks.
- Severance pay under the ESA is a separate entitlement for some long-service employees, potentially up to 26 weeks.
- Common law reasonable notice is not capped the same way and may amount to months of compensation.
1) What Is Termination Pay in Ontario?
Termination pay is the minimum amount an employer must provide when terminating an employee without cause and without working notice.
It is required under the Employment Standards Act, 2000.
- Often described as one week of pay per year of service
- Generally capped at eight weeks under the ESA
Many employees are offered only ESA termination pay and are told their package is “standard,” even though additional entitlements may exist.
Learn more about termination pay in Ontario
2) What Is Severance Pay in Ontario?
Severance pay under the ESA is a separate entitlement from termination pay. Not all employees qualify. This entitlement is set out in sections 64–66 of the Employment Standards Act, 2000.
You may qualify if:
- You have five or more years of service, and
- Your employer meets certain ESA criteria, such as a qualifying payroll size or a large number of terminations within a defined period.
ESA severance pay is generally calculated as one week per year of service, up to a maximum of twenty-six weeks.
If you qualify, severance pay is typically in addition to termination pay.
The Ontario Ministry of Labour provides additional guidance on severance pay here.
3) Common Law “Severance” (Reasonable Notice)
In addition to ESA minimums, employees may be entitled to common law reasonable notice unless a valid and enforceable employment contract limits that entitlement.
Ontario courts have long recognized that reasonable notice depends on multiple factors, including length of service, age, position,
and the availability of similar employment. These principles come from cases such as Bardal v. Globe & Mail Ltd. (1960).
Depending on these factors, common law notice can be substantially greater than ESA minimum termination and severance pay.
Read more about wrongful dismissal in Ontario
Common Misunderstandings
- Employers often use the word “severance” to describe ESA termination pay only.
- Being offered one week per year of service does not automatically mean the offer is fair.
- Signing a release may affect your ability to pursue additional entitlements.
Examples (For General Information Only)
- An employee with three years of service may receive ESA termination pay but could be entitled to more under common law.
- An employee with eight years of service may qualify for both ESA termination pay and ESA severance pay, and may also have a common law claim depending on their contract.
Frequently Asked Questions
Can I receive both termination pay and severance pay?
Yes. If you qualify for ESA severance pay, it is typically paid in addition to termination pay.
Do I have to accept the termination package I was offered?
Not necessarily. Some packages reflect only ESA minimums.
Does “without cause” mean I did something wrong?
No. Termination without cause generally means the employer is not alleging serious misconduct.
Do you assist unionized employees?
No. Monkhouse Law Employment Lawyers assists non-union employees only.
Next Steps
If you were terminated and are unsure whether your offer reflects your legal entitlements, we can help you understand your legal options. Contact us to request a free 30-minute phone consultation.