Quick answer: Ontario severance pay is a separate payment for certain employees whose employment is severed. A worker generally needs five or more years of service and must meet an employer-payroll or mass-severance condition under the ESA.
Who may qualify?
The ESA generally requires at least five years of employment. In addition, the employer must normally have a global payroll of at least $2.5 million, or the severance must occur because of a permanent discontinuance affecting 50 or more employees within six months.
Basic severance formula
The statutory calculation is broadly: regular wages for a regular work week multiplied by the sum of completed years of employment plus the completed-month fraction for a partial year. The ESA maximum is 26 weeks.
Example: A worker earns $1,100 per regular week and has 7 years and 6 completed months of service. A simple estimate is $1,100 × 7.5 = $8,250. Exact calculations can change when wages or work weeks vary.
Severance versus termination pay
| Termination pay | Severance pay |
|---|---|
| Replaces required notice | Compensates eligible long-service employees |
| Often available after 3 months | Generally requires 5 years plus another test |
| Maximum statutory notice usually 8 weeks | Maximum 26 weeks |
When employment is “severed”
Severance can include dismissal, certain layoffs, employer bankruptcy, constructive dismissal and some situations where an employee resigns after receiving notice of termination.
Before signing a release
- Check service dates and regular weekly wages.
- Separate termination and severance calculations.
- Confirm vacation pay and benefit treatment.
- Consider whether a contract or common law provides more.
Use the official Ontario severance guide and compare our termination pay guide.
This is general information, not legal advice.
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