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Common Law Severance in Ontario: What It Is and How Much You May Be Owed
Common law severance in Ontario refers to the compensation employees may be entitled to when their employment is terminated without cause. Unlike the minimum entitlements set by the Employment Standards Act, 2000, common law severance is determined by courts and frequently results in significantly higher compensation. Most employees are offered less than what they are legally entitled to. Understanding how common law severance is calculated, and how it differs from the statutory minimum, is essential before accepting any offer.
Offered a severance package in Ontario?
Most employers base initial offers on ESA minimums, not your full common law entitlement. The difference can be significant. Get advice before you sign anything, including a release.
Call: 1-800-771-7882 Get Your Severance ReviewedWhat is common law severance?
Common law severance is court-recognized compensation for reasonable notice, or pay in lieu of notice, when employment is terminated without cause. It is not a formula set by statute. It is developed through court decisions and reflects what a court would consider reasonable in the specific circumstances of the employee's situation. The result is that common law severance is almost always higher, and often significantly higher, than the statutory minimum under the Employment Standards Act, 2000.
ESA minimum vs. common law severance: the difference
| Feature | ESA severance | Common law severance |
|---|---|---|
| Source | Statute (Employment Standards Act, 2000) | Developed through court decisions |
| Eligibility | Employees with 5 or more years service and employer payroll over $2.5 million | Most non-unionized employees terminated without cause |
| Calculation | Fixed formula based on weekly wages, capped at 26 weeks | Based on the Bardal factors — no fixed cap |
| Typical amount | Weeks of pay | Months of pay, often significantly more |
| Can it be limited by contract? | Not below ESA minimums | Yes, but only if the termination clause is enforceable and ESA-compliant |
The Bardal factors: how common law severance is calculated
Courts calculate common law severance using the factors established in Bardal v. Globe and Mail Ltd. (1960). There is no fixed formula. The amount awarded depends on the specific combination of factors in each employee's situation.
Common law severance ranges in Ontario
While every case depends on its facts, the following general ranges provide a reference point. Courts assess each case individually based on the Bardal factors.
2 to 6 months
6 to 12 months
10 to 18 months
Up to 24 months
Not sure whether your severance offer reflects your common law entitlement?
Most initial offers fall well short of what employees are owed under common law. A review by an employment lawyer can tell you what you are actually entitled to before you sign anything.
Have Your Package Reviewed Or call us: 1-800-771-7882Key court decisions on common law severance in Ontario
Established the foundational factors courts use to determine reasonable notice, including age, position, and length of service. These remain the primary framework used today.
The Supreme Court of Canada confirmed that employment contracts must meet or exceed ESA minimum standards. Contracts that do not comply are unenforceable, entitling the employee to common law reasonable notice.
Recognized that senior employees may receive longer notice periods due to the difficulty of securing comparable employment, reinforcing the importance of the Bardal factors.
Confirmed that a termination clause with an invalid just cause provision voids the entire termination provision, including the without-cause clause, potentially entitling the employee to full common law notice.
When employment contracts cannot limit common law severance
Many employment contracts contain termination clauses designed to limit severance to the ESA minimum. However, courts frequently invalidate these clauses where they violate ESA minimum standards, contain ambiguous wording, or attempt to waive statutory rights. Where a termination clause is found to be unenforceable, the employee may be entitled to full common law reasonable notice regardless of what the contract says. Even if your contract appears to limit severance, that limitation may not hold up.
What to do before accepting a severance offer
Practical checklist for employees reviewing a severance offer
- Do not sign immediately — you generally have more time than your employer suggests
- Request time to review — pressure to sign quickly is a common tactic and is not legally required
- Gather your employment contract, termination letter, and recent pay stubs
- Confirm what is included in the offer — salary continuation, bonus, benefits, and any conditions
- Have a lawyer assess whether the offer reflects your full common law entitlement, not just the ESA minimum
- Do not sign a full and final release until you know what rights you are giving up
Frequently asked questions about common law severance in Ontario
What is common law severance in Ontario?
Common law severance is the compensation employees are entitled to under court-developed principles when their employment is terminated without cause. Unlike the Employment Standards Act, 2000 minimum, it is based on what a court considers reasonable in the specific circumstances of the employee's situation, taking into account age, length of service, position, and the availability of comparable employment.
Is common law severance higher than ESA severance in Ontario?
Almost always, yes. The ESA sets a statutory floor with strict caps. Common law severance has no fixed cap and can reach up to 24 months or more for long-serving or senior employees. For most employees, common law entitlement significantly exceeds what the ESA requires.
Do all employees qualify for common law severance?
Most non-unionized employees who are terminated without cause are entitled to common law reasonable notice unless a valid and enforceable termination clause in their employment contract limits this entitlement. Courts frequently find termination clauses unenforceable where they fail to meet ESA standards or contain ambiguous language.
Can an employment contract remove common law severance entitlements?
A properly drafted termination clause can limit an employee to ESA minimums, but only if the clause is unambiguous, complies fully with the ESA, and was properly incorporated into the employment contract. Many termination clauses do not meet this standard and are regularly struck down by Ontario courts, restoring the employee's full common law entitlement.
How much common law severance should I get in Ontario?
There is no fixed formula. Courts assess each case individually based on the Bardal factors. General benchmarks range from 2 to 6 months for shorter-service employees to 18 to 24 months for senior employees with long service. The only way to know your specific entitlement is to have your situation reviewed by an employment lawyer who can assess the relevant factors and compare your offer to what courts have awarded in similar circumstances.
Find out what you are actually owed
If you have received a severance offer in Ontario and want to know whether it reflects your full common law entitlement, our employment lawyers can review your situation and negotiate on your behalf before you sign anything. Contact us for a confidential consultation.
Call us at 1-800-771-7882 or fill out the form below and we will be in touch.
The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Achkar Law Professional Corporation and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Achkar Law Professional Corporation. ©