Employment Law BlogHow much severance pay should I get in Ontario?

In Ontario, if an employer fires an employee without cause, the employee can receive severance pay. When employees are terminated, they have the option to choose between receiving advance notice, immediate payment instead of notice (referred to as severance or termination pay), or a combination of both.The actual amount of severance pay varies for each person, depending on their situation.

How do we calculate severance pay in Ontario?

In Ontario, the calculation of termination pay you should receive is determined by examining common law and the ESA.

Full Severance Pay (Common Law)

In Ontario, your complete termination pay is decided by our court system, known as common law severance. Judges base this on various past court cases. The key case shaping severance calculations in Canada is Bardal v. Globe & Mail Ltd. from 1960.

The factors in Bardal that Ontario employment lawyers rely on to calculate severance include an employee’s:

1. Age; Salary; Position; Years of Service; Experience, Training, Qualifications;
2. Availability of similar employment, having regard to the experience, training and qualifications of the employee; and
3. Any other special circumstances that affect your ability to find a comparable job.

They are numerous other factors that can be in play including but not limited to: overtime pay, benefits package, and bonuses. A company may use these factors to determine the severance package they offer you.

If your employer terminates you without cause and fails to provide the correct amount of severance, it constitutes a wrongful dismissal.This is a highly likely scenario. If you’ve experienced this, reach out to Agha Law to determine your actual entitlements and discover how we can assist you in obtaining them.

What is the maximum severance pay in Ontario?

The employer generally caps the maximum severance pay you may receive at 24 months’ pay.

Employment Standards Act

Ontario’s ESA guarantees you a minimum statutory severance pay.

If you have worked continuously for at least 3 months, the company must pay you one week’s salary for each year of employment, with a maximum of eight weeks’ pay for additional years worked. If you have worked for five or more years with the company, the company also owes you an additional one week’s pay per year of service if:

1. Your company has a payroll of $2.5 million per year
2. 50 or more employees are losing their jobs over a six-month period

Under the ESA, the maximum amount of severance pay you can receive in the latter situation is 26 weeks’ pay.

To ensure you receive the full amount of your entitlement, be sure to contact Agha Law.

Truth about Termination Packages

Companies often offer termination packages that are far below what someone should receive when they lose their job. Why? Because they think they can get away with it (and they often do)! Our employment lawyers can determine how much pay you should get and help increase the size of your severance package by thousands of dollars by enforcing your rights.

I lost my job months ago; can I still receive payment?

Yes, you can ask your former employer to provide you with a proper severance package long after losing your job. In Ontario, you have 24 months from the moment you lost your job to file a legal claim for full pay through an Ontario Employment Lawyer.

Importantly, refrain from signing any termination papers when you lose your job.