Unless you’re an employment lawyer or you enjoy reading legislation for fun, it’s unlikely you know what the minimum entitlements are for severance pay in Ontario.
Well, the good news is, you are just one click away from a severance pay calculator in Ontario that can estimate how much severance pay you could potentially be entitled to. By answering a few quick questions, you can get a rough idea of how much severance pay you could be entitled to if you were terminated today. But before you go, you can find out how severance and termination pay are calculated by reading the information in this post.
You should know, however, that this information is specific to non-federally regulated, non-unionized employees. Federally-regulated employees are subject to the rules in the Canada Labour Code. And unionized employees can refer to their collective agreements. If you are a union member, your Union Steward or Union Rep should be able to explain your rights to you.
Also, the information in this post would not apply if you signed an employment contract that has a clear and valid policy regarding your rights and entitlements during the termination process. It’s important to note that any clause that violates the minimum entitlements of the Employment Standards Act (ESA) is unenforceable. Contact an employment lawyer to have your contract reviewed to see if you are limited by it in any way.
Termination Pay
An employer in Ontario can terminate any employee at any time and for any reason, unless the termination is done discriminatorily against a person because of their race, sex, sexual orientation, or any other prohibited ground established by the Ontario Human Rights Commission (OHRC.)
If you are terminated without cause, however, you are entitled, at a minimum, to be notified in advance of your employer’s intention to terminate. The ESA provides one week of notice for every year of completed service, with a minimum of 1 weeks’ notice for employees terminated between 3 months and one year, and a maximum of 8 weeks’ notice for employees who have completed 8 years of service or more.
An employer, however, who chooses to terminate the employee immediately, is required to pay them as if they continued to work during the notice period. This is called termination pay.
Severance Pay
Employees in Ontario who have worked at least 5 years with their employer are also entitled to severance pay of one week’s pay for every year worked to a maximum of 26 weeks, on top of their termination pay, providing them with what’s commonly referred to as a severance package.
Severance pay is also owed to employees who worked for an employer for 5 years or longer, but the employer went bankrupt or laid off a significant number of their employees without paying them their severance packages. There are conditions, however, that you can learn about on this page.
If You Don’t Have an Enforceable Severance Clause or Any Contract at All
You are about to get, potentially, some really good news. Judges have agreed for years that the minimums awarded by the ESA do not reasonably provide enough time to allow a person to find new employment. Instead, judges prefer to assess each case individually and consider factors that include:
- Age of the employee
- Length of service
- Position
- Availability of similar jobs
- The economic climate
- If the employee was in a ‘specialist’ role
By taking these factors into consideration, judges routinely provide a more realistic timeframe of how long it will take a specific person to find a new job, thus providing a bigger severance package.
Even if you signed an employment contract that covers notice of termination, you should still have an employment lawyer look it over. The wording of the clause may not hold up in court, which would entitle you to a common law notice period.