Canada Severance & Termination Pay 2026: Ontario and Federal Rules
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When a Canadian job ends without cause, the law guarantees a statutory minimum. This guide explains the Ontario ESA and federal Canada Labour Code rules — and why the minimum is often just a floor.
Ontario: two separate entitlements
1. Termination pay (notice). After three months, you're entitled to notice or pay in lieu: 1 week under a year, 2 weeks from 1 to 3 years, then 1 week per completed year, capped at 8 weeks.
2. Severance pay. A separate, additional entitlement of 1 week per year (plus months ÷ 12), capped at 26 weeks. It applies only if you have 5+ years of service AND the employer has a payroll of at least $2.5 million (or severed 50+ employees in six months).
Worked example (Ontario)
7.5 years' service, $1,200/week, large employer:
- Termination pay = min(7, 8) = 7 weeks → 7 × $1,200 = $8,400
- Severance pay = 7.5 weeks × $1,200 = $9,000
- Statutory total = $17,400
Federal (Canada Labour Code)
Since 1 February 2024, federally regulated employees get graduated notice: 2 weeks from three months, rising to 3 weeks at 3 years and then 1 week per year up to 8 weeks. Plus federal severance after 12 months: the greater of 2 days' wages per year or 5 days' wages.
The statutory minimum is only a floor
For most non-unionized employees, being dismissed without cause also triggers common-law reasonable notice, which courts often set at several months — well above the ESA/Code minimums. Never sign a release for the statutory minimum without checking whether you're owed more.
When it doesn't apply
Statutory termination and severance generally don't apply if you resign, or are dismissed for genuine just cause / wilful misconduct.
Frequently asked questions
How is severance pay calculated in Ontario?
Ontario ESA severance pay is one week of regular wages for each completed year of employment, plus a fraction for extra months (months ÷ 12), capped at 26 weeks. It applies only if you worked 5+ years AND the employer's payroll is at least $2.5 million (or 50+ employees were severed within six months). It is separate from, and paid on top of, termination (notice) pay.
What's the difference between termination pay and severance pay in Ontario?
Termination pay replaces the notice period (1 week per year up to 8 weeks). Severance pay is an extra entitlement for long-service employees of larger employers (1 week per year up to 26 weeks). A qualifying employee can receive both.
What is federal severance under the Canada Labour Code?
For federally regulated employees (banks, airlines, telecoms, interprovincial transport, etc.), after 12 months you're owed the greater of two days' wages per year of service or five days' wages, on top of graduated notice of 2–8 weeks.
Is the statutory amount all I can get?
No — it's the legal minimum. Non-unionized employees dismissed without cause are usually entitled to common-law 'reasonable notice', which can be several months and far exceeds the ESA/Code minimums. Get legal advice before signing a release.
Does this apply if I quit or was fired for cause?
Statutory termination and severance generally don't apply if you resign or are dismissed for wilful misconduct/just cause. They apply to without-cause terminations and layoffs.