·· Employment · Ontario
Ontario Severance Pay: Your Rights
Most Ontario employees are entitled to significantly more than their employer's first offer. The law has three layers — and most employers only lead with the minimum.
Updated June 2026 · 8 min read · Source: Ontario ESA, Ministry of Labour
The Three Layers of Ontario Severance Law
1
ESA Termination Pay
Everyone gets this
1 week per year of service (or part year), max 8 weeks. Required for all employees with 3+ months of service. Your employer must provide working notice or pay in lieu.
2
ESA Severance Pay
Only if conditions are met
Additional 1 week per year of service (no max on years, but capped at 26 weeks total). Only applies if: (a) you worked 5+ years AND (b) your employer had a payroll ≥$2.5M OR there was a mass layoff of 50+.
3
Common Law Notice
Contracts permitting
Courts regularly award 1 month per year of service for senior employees — far beyond ESA. Unless your employment contract has a valid limiting clause, you're entitled to "reasonable notice" under common law.
ESA Minimum Calculation: Quick Example
Scenario: 8 years service, $80,000 salary, employer payroll > $2.5M
ESA Termination Pay
8 weeks × ($80,000 ÷ 52)
$12,308
ESA Severance Pay
8 weeks × ($80,000 ÷ 52)
$12,308
ESA Total Minimum
$24,615
Common Law (1 mo/yr estimate)
8 months × ($80,000 ÷ 12)
$53,333
The gap is real: Common law entitlement is often 2–4× the ESA minimum. The employer's first offer is nearly always the ESA minimum.
How to Negotiate Your Severance
1
Don't sign anything at the meeting. Request time to review (minimum 1 week; 2–3 weeks is reasonable and employers generally expect it).
2
Consult an employment lawyer. Many offer free 30-minute consultations and work on contingency for wrongful dismissal cases.
3
Research your common law entitlement. Use the Bardal factors: age, years of service, seniority, job market. Our calculator gives starting estimates.
4
Counter at 150–200% of their first offer. Getting 25–50% more than the initial offer without legal action is common.
5
Check for "without cause" vs "with cause." Wrongful dismissal "with cause" is very hard for employers to prove — if the letter says "without cause," your rights are fully intact.
📋 Calculate Your Ontario Severance
Enter your years of service, salary, and employer type to see your ESA termination pay, ESA severance pay, and common law estimate in seconds.
Frequently Asked Questions
What's the difference between termination pay and severance pay?
Termination pay (max 8 weeks) applies to nearly all employees. Severance pay (max 26 weeks) is an additional layer for employees with 5+ years at employers with $2.5M+ payroll. Many qualify for both.
What are the Bardal factors for common law notice?
Age, length of service, character of employment (senior roles get more), and availability of similar employment. Older, longer-tenured, more senior employees receive higher awards.
Is severance taxable in Ontario?
Yes — both ESA and common law severance are fully taxable income. Your employer must withhold tax.