Side by side
| Termination pay | Severance pay | |
|---|---|---|
| What it is for | Pay instead of advance notice | Compensation for long service and losing seniority |
| Who gets it | Everyone employed 3 months or more | 5+ years of service and a $2.5M+ payroll (or 50+ cut in 6 months) |
| How much | 1 to 8 weeks (by full years) | 1 week per year + partial year, up to 26 weeks |
| Can working notice replace it? | Yes | No |
| Tax treatment | Like normal pay | Retiring allowance (lump-sum withholding) |
| Paid when | Within 7 days or next payday | Same (instalments possible with consent) |
An example with both
Seven years and two months of service at $1,400 a week, large employer:
- Termination pay: 7 weeks = $9,800.00.
- Severance pay: 7 + 2/12 = 7.17 weeks = $10,033.33.
- Total ESA minimum: $19,833.33.
And “common-law” severance?
When people say a lawyer “got them a better severance”, they usually mean reasonable notice at common law. Unless your employment contract has a clear, legal clause limiting you to the ESA, a court can award notice based on your age, service, role and how hard it will be to find similar work — often several months, sometimes up to 24. The ESA amounts are the floor, not the ceiling.
A gentle checklist before signing anything
- Check your offer letter or contract for a termination clause.
- Compare the package with the ESA minimum (this calculator) — it can never be lower.
- Ask for the offer in writing and take the time you are given; a few days is normal.
- Consider a consultation with an employment lawyer; many offer a short first call.
Quick reference: your rights when you are let go in Ontario
- Notice or pay: 1 week after 3 months, 2 weeks after 1 year, then 1 week per year up to 8.
- Severance pay: 1 week per year (with partial years) up to 26, after 5 years at an employer with a $2.5M+ payroll.
- Vacation pay owing must be paid out; benefits continue during the statutory notice period.
- Record of Employment within 5 calendar days of the interruption of earnings.
- Deadline to complain: a claim with the Ministry of Labour must generally be filed within two years.
When the ESA does not apply
Federally regulated workplaces (banks, airlines, telecoms, interprovincial transport) follow the Canada Labour Code instead, with different notice and severance rules. Some workers are excluded from parts of the ESA, for example certain construction employees and people on temporary layoff that has not yet become a termination.
Before you sign
A severance offer usually comes with a release. Signing it normally ends your right to claim more. Take the time you are given, compare the offer with the ESA minimum on this page and, if the gap to common-law notice could be large, consider a short consultation with an employment lawyer. Many work on contingency for wrongful dismissal claims.
Rules checked on 5 November 2026 against the Employment Standards Act, 2000.
FAQ
What is the difference between severance and termination pay?
Termination pay replaces notice (up to 8 weeks). Severance pay is extra compensation for long service (5+ years, up to 26 weeks) at larger employers.
How much would I get after 7 years 2 months at $1,400 a week?
$9,800.00 termination pay plus $10,033.33 severance pay = $19,833.33 (if your employer’s payroll is $2.5M+).
Can my employer give working notice instead of severance?
Working notice can replace termination pay, but never severance pay.
Sources (checked 5 November 2026): Employment Standards Act, 2000 (Ontario), ss. 54–57 (notice of termination: 1 to 8 weeks) and ss. 63–66 (severance pay: 5 years, $2.5 million payroll, 1 week per year to 26 weeks); Ontario Ministry of Labour “Your guide to the Employment Standards Act”; Employment Hero, “Ontario severance pay guide: 2026 rules”; CRA T4001 Employers’ Guide (lump-sum withholding 10% / 20% / 30% outside Quebec).