Losing your job is tough, and figuring out what you’re owed can be even more confusing. You might hear terms like “termination pay” and “severance pay” thrown around, and it’s easy to assume they’re the same thing. They’re not.
Understanding the difference is the first step to making sure you get everything you deserve. Let’s clear it up.
Termination Pay vs. Severance Pay: What's the Difference?
Think of them as two separate things, because legally, they are.
Termination Pay: This is pay you get instead of a notice period. Most employees in Ontario who have worked for more than three months are entitled to it when they are fired without cause. It’s the legal minimum your employer must give you to bridge the gap after losing your job.
Severance Pay: This is extra compensation. It’s meant to recognize your years of service and the loss of seniority with a company. It’s only for long-serving employees at larger companies.
So, while you might get termination pay, you may also be entitled to severance pay on top of it.
Calculate your severance pay, learn how to request severance pay when terminated, and discover how to negotiate a higher severance package.
The Two Big Rules for Severance Pay in Ontario
Under Ontario’s Employment Standards Act (ESA), you are entitled to severance pay if you were terminated and you meet both of these conditions:
1. You worked for the employer for five or more years. (This includes all your time with the company, even if your role changed.)
AND
2. Your employer is a certain size. This means they either:
- Have a global payroll of at least $2.5 million, OR
- They terminated 50 or more employees within a six-month period because the business is closing down a part of its operations.
If you check both of those boxes, you are legally entitled to severance pay under the ESA.
What to Do If You Believe You Were Denied Severance Unfairly
Don’t just accept your employer’s decision at face value. If you worked somewhere for more than five years and believe the company is large enough to qualify, you should not walk away empty-handed.
1. Don’t Sign Anything: Do not sign a release or a final offer until you are sure it’s fair.
2. Gather Your Documents: Keep your pay stubs, employment contract, and termination letter.
3. Seek Legal Advice: This is the most important step. The rules under the ESA are just the minimum. Under common law, courts often award much more generous packages based on your age, role, and length of service—sometimes up to 24 months’ pay.
You Earned It. Don't Leave It on the Table
Your years of dedication to a company have value. Severance pay is the law’s way of recognizing that. If you believe you’ve been unfairly denied what you’re owed, you have the right to challenge it.
