Ontario Termination Pay
Facing an unexpected termination can be overwhelming. Whether you’ve just lost your job or are managing terminations within an organization, understanding termination pay in Ontario is essential.
This article explains:
- What termination pay is
- Who qualifies
- How it’s calculated
- How it differs from severance pay
- When common law notice might apply
What Is Termination Pay?
Under Ontario’s Employment Standards Act, 2000 (ESA), termination pay arises when an employer ends an individual’s employment without cause and does not provide working notice.
Employers have two legal options:
- Provide Working Notice: The employee works until a set termination date.
- Provide Termination Pay: A lump sum payment instead of notice.
Even if no written notice is given, termination pay is still required, ensuring individuals receive compensation and time to transition.
Employers cannot terminate employees for reasons that violate the ESA or Ontario Human Rights Code, such as:
- Discrimination
- Retaliation for asserting legal rights
- Protected leaves (e.g. parental, medical)
As Christopher Achkar, employment lawyer and founder of Achkar Law, explains:
“Whether you’re an employee facing termination or an employer preparing to let someone go, understanding Ontario’s termination pay rules is essential. Speaking to a lawyer before taking action can help protect your rights, limit liability, and ensure compliance with the law.”
Who Is Entitled to Termination Pay?
You may be entitled if:
- You were terminated without cause
- You experienced a constructive dismissal (your job changed significantly without your consent)
- You were laid off for longer than allowed under the ESA
Exceptions:
- Employees with less than 3 months of service
- Certain categories of workers (e.g. most construction employees)
ESA Minimums: How Much Termination Pay Am I Owed?
The ESA provides 1 week of termination pay per year of service, up to 8 weeks max.
ESA Termination Pay Table
| Length of Service | ESA Minimums |
|---|---|
| Less than three months | None |
| 3 months to 1 year | 1 week |
| 1 to 2 years | 2 weeks |
| 3 years | 3 weeks |
| 4 years | 4 weeks |
| 5 years | 5 weeks |
| 6 years | 6 weeks |
| 7 years | 7 weeks |
| 8 years | 8 weeks |
What About Common Law Termination Pay?
If your employment contract doesn’t validly limit your entitlements to the ESA minimums, you may be entitled to common law reasonable notice, which is often much more generous.
Ontario courts consider factors such as:
- Age
- Length of service
- Nature of the position
- Availability of similar work
In many cases, common law notice can range from 3 to 24 months, and sometimes more.
Termination Pay vs. Severance Pay: What’s the Difference?
These terms are often confused, but they mean different things in Ontario:
| Type | What It Covers |
|---|---|
| Termination Pay | ESA minimum compensation for losing your job without cause |
| Severance Pay | Additional ESA pay (for 5+ years of service + $2.5M employer payroll) |
Special Rules & Exceptions
Some employees are treated differently under Ontario law:
- Construction workers are typically exempt from ESA termination and severance pay.
- Temporary layoffs that exceed ESA limits can be considered a termination.
- Fixed-term contracts may trigger pay obligations if ended early.
Don’t Assume the Offer Is Fair
If you’ve been handed a termination letter, you don’t have to accept it at face value.
Many employers offer less than what you’re actually owed.
Before signing anything:
- Have the offer reviewed by a lawyer
- Understand whether the ESA or common law applies
- Clarify if severance pay should also be included
Talk to a Termination Lawyer in Ontario
Whether you’ve been dismissed without cause, laid off, or handed a severance package, Achkar Law can help you understand what you’re legally owed, and take steps to get it.
Video: What HR Doesn’t Explain About Termination Rights
Think your termination package is fair? Think again.
In this video, we break down what employers often leave out, and what HR rarely tells you, about your true rights under Ontario law. From ESA minimums to common law entitlements, find out what you may actually be owed before you sign anything.
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. ©