Severance Pay vs. Termination Pay in Ontario: What Is the Difference?

Published on
July 8, 2026
Written by Saad Mirza

Most people use “severance pay” and “termination pay” as if they mean the same thing. They do not. In Ontario, they are two separate entitlements — and you may be owed both.

Here is the difference:

Termination pay is the basic amount your employer owes you when they let you go without cause. Think of it as the notice your employer should have given you — paid out in cash instead.

Under Ontario’s Employment Standards Act, you are entitled to one week of pay for each year you worked, up to a maximum of eight weeks.

Years Worked	Termination Pay
Less than 1 year	1 week
1 to 3 years	2 weeks
3 to 4 years	3 weeks
4 to 5 years	4 weeks
5 to 6 years	5 weeks
6 to 7 years	6 weeks
7 to 8 years	7 weeks
8 or more years	8 weeks

Everyone who has worked more than three months is entitled to this — regardless of the reason for termination.

Severance Pay

Severance pay is a separate, additional amount on top of termination pay. Not everyone gets it — you only qualify if two conditions are met:

You have worked for your employer for five or more years, and
Your employer has a payroll of at least $2.5 million per year — or is eliminating 50 or more positions

If both conditions apply, you are entitled to one week of pay per year of service — up to a maximum of 26 weeks.

A Simple Example

Maria worked at a large company for 8 years before being let go without cause.

Termination pay — 8 weeks (ESA maximum)
Severance pay — 8 weeks (one per year of service)
Total ESA entitlement — 16 weeks

Two separate amounts. Both owed. One cheque does not cover both.

The Part Most People Miss — Common Law Notice

The ESA amounts above are the legal minimums. Ontario courts can award significantly more under common law, based on your age, role, and how long you worked there.

For many employees — especially those with long service or senior positions — the common law entitlement is far greater than what the ESA requires. This is the amount your employer hopes you do not ask about.

The Bottom Line

If you were let go, you may be owed both termination pay and severance pay — and possibly more under common law. Do not assume the number your employer gave you covers everything. It often does not.