Severance pay in Ontario: minimums vs. what you may really be owed
Updated September 2026 · Ontario · Employment
Just been let go in Ontario? Two different legal systems decide what you're owed: the Employment Standards Act (ESA) sets the floor, and the common law often sets a much higher ceiling. Most people are offered the floor. This guide explains both — and why signing the release package in a hurry is the most expensive mistake you can make.
Two systems, very different numbers
The ESA guarantees minimum entitlements on termination without cause. But unless your contract contains an enforceable termination clause limiting you to those minimums (many don't — courts strike down poorly drafted ones regularly), you're also entitled to 'reasonable notice' under the common law, which is frequently several times the ESA amount.
In practice: the ESA might give you 8 weeks while the common law gives you 8 months. Knowing which applies to you is worth real money.
ESA termination pay: the basics
If you've worked at least 3 months, your employer must give you advance written notice of termination or pay in lieu: roughly one week per year of service, up to a maximum of 8 weeks. This applies to most non-union employees terminated without cause.
Termination pay is based on your regular wages — and it continues your benefits for the notice period. It is separate from, and in addition to, any severance pay you may also be owed.
ESA severance pay: the extra only some get
On top of termination pay, some employees get statutory severance pay: one week per year of service (pro-rated for partial years), up to 26 weeks. But it only applies if you have 5+ years of service AND either the employer has an Ontario payroll of $2.5 million or more, or 50+ employees were severed within 6 months.
Severance pay under the ESA is calculated on total compensation — base salary plus commissions, bonuses, and the value of benefits — not just base pay.
Common law notice: often the bigger number
Courts assess 'reasonable notice' using the Bardal factors: your age, length of service, the character of your position, and the availability of similar work. Long-service, older, senior, or specialized employees get more — awards commonly reach 12 months and can approach 24 months in exceptional cases.
This is why the release your employer asks you to sign matters so much: it almost always trades away your common law rights for something close to the ESA minimums, in exchange for a short signing deadline designed to rush you.
Before you sign anything
Do not sign a release on the spot. Ask for the offer in writing, check the deadline (you can usually negotiate more time), and get the package reviewed — an employment lawyer's review often pays for itself many times over, and many offer free initial consultations.
Document everything: your start date, position history, compensation details including bonuses and commissions, and the termination letter itself. If you decide to negotiate or pursue a claim, that paper trail is your leverage.
Review your termination letter
Generate a clear termination letter or review checklist with Ontario-specific terms — free to draft and edit.
Open the termination toolReview your draft and download it in Word or PDF when you're ready.
This guide is general information about Canadian law, not legal advice. Laws change and every situation is different — have a licensed lawyer in your province review your document before you rely on it.