How do termination and severance pay work in Ontario?
Ontario's Employment Standards Act requires termination notice or pay in lieu of one week per year of service up to 8 weeks, plus, separately, severance pay of one week per year up to 26 weeks for employees with five or more years' service where the employer's payroll is at least $2.5 million. The two stack: the combined statutory maximum is 34 weeks.
Ontario ESA exit entitlements
Termination notice/pay1 week per year of service, capped at 8 weeks (from 3 months' service)
Severance pay1 week per year, capped at 26 weeks (5+ years' service and $2.5M+ payroll)
Combined statutory maximum34 weeks
Mass terminationEnhanced rules at 50+ terminations in 4 weeks
On topCommon law reasonable notice unless validly contracted out
The two entitlements people merge into one
Termination pay and severance pay are different obligations with different tests. Termination notice/pay applies from three months' service, scaling one week per year to a cap of eight. Severance pay is the second layer: employees with five or more years whose employer has a global payroll of at least $2.5 million (or where 50+ employees are severed in six months in a business discontinuance) receive one week per completed year, pro-rated for part years, capped at 26 weeks. A 30-year employee of a qualifying employer is owed 8 plus 26: 34 weeks under the statute alone, before common law says anything.
What sits on top and underneath
Underneath: employees with less than three months' service fall outside ESA notice entirely, though human rights protections apply from day one and contractual or common law obligations can still exist. On top: unless a valid termination clause limits it, common law reasonable notice supersedes these floors, and mass-termination rules (50+ in four weeks) impose enhanced notice and Ministry filings. Benefits continuation through the statutory notice period is mandatory, a detail payroll misses more often than it should.
The federal contrast inside the same country
Federally regulated employers run different arithmetic: graduated notice of two to eight weeks (since February 2024), severance of two days' wages per year (minimum five days), and, uniquely, the unjust dismissal regime letting non-managerial employees with 12 months' service challenge dismissal itself, with reinstatement available. Same country, materially different exit maths; classify the workforce before costing the restructure.
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