How Does Severance Pay Work In Ontario?

Blackburn Lawyers has been representing clients with their employment law needs (for both employers and employees) since 1975. Our employment lawyers have provided legal advice and guidance on a variety of different employment law legal topics including severance package reviews in Ontario. Our Richmond Hill employment lawyers can offer personalized strategies for personal situations because every termination is different. Contact our law firm today for a consultation if you require legal assistance regarding severance pay by dialing 905-884-9242.

What is severance pay?

Severance pay in Ontario is defined as “compensation that is paid to a qualified employee who has their employment served” according to the Province of Ontario’s website. Severance pay is not to be confused with termination pay which is paid out when an employee gives notice of their termination.

When does severance occur?

While there are some exceptions, severance pay is generally given when:

  • An employer stops the employment of an employee due to bankruptcy or insolvency of the employer or business establishment;
  • When an employee has been constructively dismissed and the employee has resigned within a certain time frame;
  • An employer has laid off the employee for 34 or more weeks in a period of 52 consecutive weeks;
  • An employee has been laid off due to a business establishment closing; or
  • An employee has been given a written notice of termination and the employee resigns within two weeks of the written notice at which point the resignation takes effect during the statutory notice period.

How do I know if I qualify for severance pay?

While there may be some exceptions, most employees may qualify for severance pay if their employment has been severed and:

  • They have worked or been employed by their employer for five or more years; and
  • Their employer has a payroll in Ontario of at least $2.5 million or if they have severed the employment of 50 or more employees in a 6-month period due to all or part of their business being permanently closed

The Employment Standards Act & How Severance Pay is Calculated

According to the Employment Standards Act (“ESA”) in Ontario, severance pay that an employee may be entitled to receive is calculated by multiplying the employee’s regular wages for a regular work week by the sum of the number of completed years of employment and the number of completed months of employment which is then divided by 12 for a year that is not completed. The maximum severance pay required under the ESA is typically 26 weeks but there are certain circumstances where this may or may not apply.

Schedule a consultation with an employment lawyer from Blackburn Lawyers

We recognize that clients may have different goals such as wanting to resolve the issue through the courts at any cost or they may want to resolve the issue expeditiously. Regardless of their objective – we put our client’s priorities and best interests first and will provide them legal advice based on their individual situation.

If you have been given a severance package to review – we recommend you contact our law firm for a consultation with one of our employment lawyers. Our employment lawyers will review your severance package for a fee and advise you on whether you may be eligible for more or if you have been entitled to the appropriate amount under the ESA. Call 905-884-9242 now to schedule a consultation.

Disclaimer: Please be advised that this blog is intended to act as a general overview on a legal topic and does not constitute legal advice. Each legal issue is independent and unique and in order to get qualified legal advice we recommend you consult with a Richmond Hill employment lawyer on this topic. Please note that lawyer-client relationships are only established after you have signed a retainer agreement with our firm.