How Does Severance Pay Affect Unemployment Benefits articles

How Does Severance Pay Affect Unemployment Benefits

Losing your job is a tough experience, filled with worries about how to pay for daily living expenses while looking for new work.

In Canada, there are helpful systems in place, like severance or termination pay and Employment Insurance (EI), designed to support you during this difficult time. Understanding how severance pay works with EI can be a bit tricky. This article will help make things clearer, showing you what you’re entitled to and how to go about getting it.

Understanding Severance Pay vs. Termination Pay

In Ontario, when your job ends and it’s not because of something you did, you might hear about severance pay and termination pay. While people often use these terms like they mean the same thing, there’s a crucial difference.

Termination Pay is what you get when your job ends without cause and the company hasn’t given you enough notice. The law in Ontario sets out minimum standards for this notice, but if you don’t get it, termination pay helps cover that gap. The amount you receive is based on how long you’ve worked there, with a set formula used to calculate it.

Severance Pay, on the other hand, goes a step further. It’s an additional amount that you might be eligible for if you’ve been with a company for a certain length of time, and the company meets specific size criteria. Severance is designed to compensate you for job loss, recognizing your years of service and helping you transition to new employment. The calculation for severance pay considers your employment duration, age, and other factors, and it’s often more substantial than termination pay.

It’s crucial to understand these differences because your entitlements under Ontario law can significantly affect your financial planning and the support you receive after job loss. Not everyone will qualify for severance pay, but termination pay is more broadly applicable.

Understanding EI and Severance Packages?

Figuring out how Employment Insurance (EI) benefits interact with severance packages can be complex, but it’s crucial for ensuring you receive all you’re entitled to. Whether you’re recently laid off or negotiating your severance, Achkar Law can provide you with the legal insight to navigate these waters. Our consultation aims to clarify your rights and maximize your benefits during transitions.

What Are Unemployment Benefits?

Also known as EI, unemployment benefits are for people who’ve lost their jobs but not because of something they did wrong. To get these benefits, you need to show that you paid into the EI program while working and are actively looking for a new job.

Severance Pay and Unemployment Benefits Together

Severance pay helps cover your expenses until you find a new job, just like EI does. However, if you’re getting severance pay, it might delay the start of your EI benefits. It’s still a good idea to apply for EI right away, so there’s no gap once your severance pay runs out. If you end up getting severance after EI starts, you might have to pay back some of the EI money, so it’s wise to be prepared for that possibility.

How to Look After Yourself

If you know you’re going to lose your job, talking to an employment lawyer right away can help you get the best severance deal possible and figure out the best time to apply for EI. Being careful with your money when you’re out of work is also smart, especially if you might need to repay some EI benefits later.

It’s important to keep looking for work to make sure you qualify for both severance pay and EI. If you stop looking for jobs, you might not get any financial help.

How Can an Employment Lawyer Help?

Losing your job can be overwhelming, and understanding your rights and entitlements regarding severance pay, termination pay, and Employment Insurance (EI) can be complicated. An employment lawyer can be a valuable ally during this time. Here’s how they can assist:

1. Clarifying Your Rights: An employment lawyer can explain your rights under Ontario law, helping you understand the differences between severance pay and termination pay, and what you’re entitled to.

2. Assessing Your Situation: They can assess your specific situation to determine if you’ve received all the compensation you’re due, including whether your severance package is fair and in line with legal standards.

3. Negotiating on Your Behalf: If you’re entitled to more than what’s been offered, a lawyer can negotiate with your former employer to ensure you receive a fair settlement. This includes advocating for a better severance package or ensuring that termination pay meets legal requirements.

4. Applying for EI: While applying for EI might seem straightforward, having an employment lawyer review your application can prevent delays. They can advise on how to report severance and termination pay to avoid issues with your EI benefits.

5. Legal Representation: If disputes arise, whether related to wrongful dismissal, insufficient severance, or other employment issues, a lawyer can represent your interests in legal proceedings, ensuring your rights are protected.


Losing your job and figuring out financial support like EI and severance pay can be stressful and confusing. It’s important to remember that you can’t get EI at the same time as severance pay because they both serve the same purpose. But, you can start EI as soon as your severance period is over.

If you’re dealing with job loss, talking to an employment lawyer can help you get the best outcome from your severance package and make sure you’re set up for the next steps.

Ready to Take the Next Step? Contact Achkar Law Today

Dealing with your rights and entitlements after job loss can seem overwhelming, but you’re not alone. The skilled team at Achkar Law is here to guide you with expert advice tailored to your unique situation. Investing in a 60-minute consultation with our employment lawyers is a strategic move toward securing your rights and future.

In this session, we’ll closely examine your case, offering clear, actionable advice that aligns with your best interests. This is a valuable step toward peace of mind and financial security. With our expertise, you’ll learn how to enhance your severance and termination benefits, streamline the EI application process, and confidently address any employment issues.

Don’t let uncertainty shape your future. An investment now can significantly impact the resolution of your employment matter. Reach out to Achkar Law today, and let’s discuss how we can support you and ensure you receive all you’re entitled to—let’s tackle this journey together.

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Maximize Your Entitlements: EI and Severance Packages

Ensuring you’re fully leveraging your entitlements from both Employment Insurance (EI) and severance packages is key to a stable transition after job loss. The intricacies of how these benefits work together can impact your financial planning. Achkar Law is here to demystify these processes for you. Our goal is to empower you with the knowledge and strategy needed to secure your financial well-being.

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