Termination Pay vs. Severance Pay in Ontario: What You Need to Know

Losing your job can be one of the most stressful experiences in life. On top of the emotional impact, it often leaves employees confused about what they’re legally entitled to receive. Two key concepts under Ontario’s Employment Standards Act, 2000 (ESA) are termination pay and severance pay. Although many people use these terms interchangeably, they are not the same thing.

At Apuntar Legal Services, we help employees understand their rights and secure the compensation they deserve. Here’s what you need to know.

Termination Pay: Your Right to Notice

Under the ESA, most employees are entitled to notice of termination (or pay instead of notice) if they are let go without cause.

• ESA Sections: 54–67

• Amount: Ranges from 1 to 8 weeks, depending on how long you’ve worked for your employer.

• Purpose: To give you time to transition to a new job or receive pay in lieu of that notice.

Example: If you’ve worked for an employer for 4 years, you are entitled to 4 weeks’ notice or 4 weeks of termination pay.

Severance Pay: Recognition of Long Service

Severance pay is a separate entitlement from termination pay. It recognizes long-term service and compensates employees for the loss of seniority and job security.

• ESA Sections: 64–66

• Eligibility: You qualify if you:

  1. Worked for the employer for at least 5 years, AND

  2. The employer has a payroll of $2.5 million or more, OR your termination is part of a group layoff of 50+ employees in a 6-month period.

• Amount: One week of pay per year of service (including partial years), up to a maximum of 26 weeks.

Example: If you worked 12 years for an employer with a payroll of $5 million, you may be entitled to 12 weeks of severance pay, in addition to termination pay.

Termination Pay vs Severance Pay: Key Differences at a Glance

Feature	Termination Pay	Severance Pay
Purpose	To cover notice period	To recognize long service and loss of seniority
Who Qualifies	Most employees (unless exempt)	Employees with 5+ years & large employer/mass layoff
Calculation	1–8 weeks	1 week per year of service (max 26 weeks)
ESA Sections	54–67	64–66

Beyond the ESA: Common Law Notice

It’s important to remember that the ESA only sets the minimum standards. Courts in Ontario often award employees much more compensation under common law reasonable notice, depending on factors such as age, length of service, role, and the availability of comparable employment.

• Leading Case: Bardal v. Globe & Mail Ltd. (1960) In this landmark Ontario case, the court ruled that there is no fixed formula for determining reasonable notice. Instead, judges must consider factors like age, length of service, character of employment, and availability of similar work. These are now known as the “Bardal factors” and remain the guiding principles today.

In practice, this means that while the ESA might entitle an employee to a few weeks, courts can (and often do) award many months of notice pay.

How Apuntar Legal Services Can Help

At Apuntar Legal Services, we know that every termination is unique. Here’s how we support employees:

• Review your case: We assess whether you qualify for ESA termination pay, severance pay, and potentially much greater common law notice.

• Analyze contracts: We review your employment contract to see if termination clauses limiting your entitlements are valid—or unenforceable.

• Negotiate fair packages: We advocate on your behalf to maximize your severance package and protect your rights.

• Provide clear advice: We explain your options in plain language, so you can make informed decisions during a difficult time.

What to Do if You’re Terminated

1. Don’t sign anything right away. Employers often pressure employees to sign release agreements quickly—doing so may waive your rights to additional compensation.

2. Gather your documents. Keep your employment contract, pay stubs, and termination letter.

3. Seek legal advice. A legal professional can determine whether your offer is fair or if you’re entitled to more.

4. Act quickly. You typically have up to two years to pursue a wrongful dismissal claim.

Final Thoughts

Termination pay and severance pay are two distinct entitlements under Ontario law, and both may apply when your employment ends. The ESA sets the minimums, but common law often provides greater rights—as established in leading cases like Bardal v. Globe & Mail.

If you’ve recently been terminated—or suspect that you may be—contact Apuntar Legal Services. We’re here to ensure you receive the compensation and fair treatment you deserve.

Contact us today to schedule a consultation.