Severance Pay Ontario: Who Qualifies and How Much You Get
Quick answer: Severance pay in Ontario is owed under the Employment Standards Act, 2000 when your job is severed after at least five years with an employer whose global payroll is $2.5 million or more, or that cut 50+ jobs in six months in a closure. You get one week of regular wages per year of service, capped at 26 weeks.
Key takeaways
Ontario's Employment Standards Act, 2000 (ESA) requires severance pay only for staff with five or more years of service whose employer's worldwide payroll is $2.5 million or higher, or who are among 50+ employees severed within six months because all or part of a business closes for good.
The ESA formula is regular weekly wages multiplied by completed years of service plus completed months divided by 12, with a maximum of 26 weeks.
Severance pay is separate from termination pay, which replaces written notice of one to eight weeks (up to 16 weeks in a mass termination), so many Ontario workers are owed both.
Under a temporary federal Employment Insurance (EI) measure, separation earnings such as severance pay are not deducted from benefits for claims or allocations beginning from March 30, 2025, up to October 9, 2027.
Last updated: October 8, 2026
Severance pay Ontario rules matter more than usual this fall, as tariff-related cuts hit Ontario workplaces; in Hamilton, the union confirmed 350 layoffs at Stelco's Hamilton plant, according to CP24, and later reports put the total at up to 500 across Hamilton and Nanticoke. If you have lost your job or expect to, this guide explains who qualifies for severance under the province's Employment Standards Act, 2000 (ESA), how to calculate it, when it must be paid and how it interacts with federal Employment Insurance (EI).
This guide covers Ontario's provincial severance rules under the ESA. The EI section explains the federal program, which applies across Canada.
Who qualifies for severance pay in Ontario?
You qualify if your employment is severed, you have worked for the employer for five years or more, and the employer either has a global payroll of at least $2.5 million (CAD) or severed 50 or more employees within six months because all or part of the business permanently closed. All three conditions must be met.
Under the severance pay Ontario rules, the five years count all of your time with that employer, whether continuous or not and whether you were actively working or not. That means earlier stints with the same company can add up.
Under the ESA, your employment is "severed" when your employer:
dismisses you or stops employing you, including because of bankruptcy or insolvency;
constructively dismisses you, for example by making a major cut to your pay or position, and you resign within a reasonable time;
lays you off for 35 weeks or more within 52 consecutive weeks (or past the end date of an approved extended layoff);
lays you off because all of the business at an establishment closes permanently; or
gives you written notice of termination and you resign with two weeks' written notice that takes effect during the statutory notice period.
How much severance pay will I get in Ontario?
You get one week of regular wages for each completed year of service, plus a fraction for completed months in a partial year, up to 26 weeks in total. Overtime, vacation pay and premium pay are not part of "regular wages."
Use these steps to estimate your own severance pay in Ontario:
Find your regular wages for a regular work week (for example, 37.5 hours at $30 an hour is $1,125).
Count your completed years of employment (say, 12).
Take your completed months in the unfinished year and divide by 12 (6 months ÷ 12 = 0.5).
Add the two figures (12 + 0.5 = 12.5).
Multiply your weekly wages by that total ($1,125 × 12.5 = $14,062.50).
Someone with 30 years of service still receives a maximum of 26 weeks under the ESA. If your pay is based on commissions or your hours change from week to week, your weekly amount is the average of the regular wages you earned in the weeks you worked during your last 12 weeks.
One detail that is easy to miss: the weeks of termination notice, whether worked or paid out as a lump sum, count toward your years and months of service. A payout covering two months of notice can push you into a higher fraction.
Is severance pay the same as termination pay?
No. Termination pay replaces the written notice your employer must give before ending your job, while severance pay compensates long-serving employees for losses such as seniority. Eligible Ontario workers can receive both.
Termination notice, or pay in lieu of notice, applies once you have been employed continuously for three months. The ESA scale is:
less than 1 year of employment: 1 week;
1 year to under 3 years: 2 weeks;
3 years to under 4 years: 3 weeks;
4 to under 8 years: 1 week per completed year (4, 5, 6 or 7 weeks);
8 years or more: 8 weeks.
In a mass termination of 50 or more employees at one establishment within four weeks, notice depends on how many people are let go: 8 weeks for 50 to 199, 12 weeks for 200 to 499 and 16 weeks for 500 or more. You also earn vacation pay on termination pay, and your employer must keep paying benefit plan contributions for the notice period.
When must my employer pay severance pay in Ontario?
Severance must be paid within seven days of your employment ending or on your next regular payday, whichever comes later. Your employer may spread payments over up to three years only with your written or electronic agreement, or with approval from the Director of Employment Standards.
If the employer misses a scheduled instalment, the full remaining amount becomes due at once. Termination pay follows the same "seven days or next payday" timing.
Who does not get severance pay in Ontario?
Several groups are excluded from ESA severance even when they meet the service rule. The main exemptions cover employees who:
refuse an offer of reasonable alternative employment with the employer, including one available through a seniority system;
retire on a full pension that recognizes all the years of service they would normally have worked (Canada Pension Plan benefits do not count);
are let go in a permanent closure the employer proves resulted from a strike's economic impact;
work in construction, or in on-site maintenance of buildings, roads, sewers, pipelines and similar works;
committed serious, uncondoned wilful misconduct, disobedience or neglect of duty; or
lose their job because the contract became impossible to perform due to an unforeseen event (bankruptcy, insolvency and an employee's illness or injury do not count as this kind of event).
Employees with recall rights, which are common in collective agreements, face one more choice. If you are on a layoff of 35 weeks or more and have recall rights, you must choose between keeping those rights and taking your termination and severance pay, and that choice has to be the same for both.
Does severance pay affect EI in 2026?
For now, mostly not. Normally, severance and other money paid because of a job loss is allocated against your EI benefits from the week you are separated, which delays your payments. Under temporary federal EI measures, those separation earnings are not deducted from benefits if your claim (or the allocation) begins from March 30, 2025, up to October 9, 2027.
The same set of measures includes the following:
The one-week EI waiting period is waived for new claims that start between March 30, 2025, and October 9, 2027.
Long-tenured workers whose claims start between June 15, 2025, and June 12, 2027, and who have received at least one week of regular benefits, may get up to 20 extra weeks, to a maximum of 65 weeks. "Long-tenured" means fewer than 36 weeks of regular or fishing benefits in the previous three years and at least 30% of the annual maximum EI premiums paid in at least 7 of the past 10 years.
If your claim begins from October 11, 2026, up to October 9, 2027, only the reason your most recent job ended is reviewed; if that job ended through no fault of your own, all insurable hours in your qualifying period count, even from an earlier job you quit or lost for misconduct.
Apply for EI as soon as you stop working, and report every payment your employer makes so your claim is assessed correctly.
Common severance pay Ontario mistakes to avoid
Most severance problems come from mixing up the two entitlements or signing too quickly. Watch for these errors:
Accepting "termination pay" as your severance. Check that your package lists both amounts if you have five or more years with a qualifying employer.
Leaving out notice weeks. Notice weeks raise your service total in the severance formula.
Resigning too early. If you quit after receiving notice, give two weeks' written notice and make sure the resignation takes effect during the statutory notice period, or you may lose severance.
Confusing ESA minimums with what you could claim in court. The ESA sets minimums. Some employees have greater common-law rights, but you cannot file an ESA claim with the ministry and also sue for wrongful dismissal over the same job loss, so get legal advice before choosing.
What this means for you
If you have been laid off in Ontario, gather your employment dates, pay stubs and Record of Employment, run the five-step formula above and compare it with your employer's offer before signing a release. Severance pay in Ontario is a legal minimum, so a package below it should be questioned. For free help on your ESA rights, call the Employment Standards Information Centre at 1-800-531-5551 (toll-free).
Related Jobsiz reading: Stelco Layoffs 2026: Rights, EI and Next Steps, EI Premium Rate 2027: New Rate and Maximums Explained and Minimum Wage Canada by Province 2026: Full Table.
Frequently asked questions
How much severance pay do you get in Ontario?
Under the ESA you receive one week of regular wages for each completed year of service, plus completed months in a partial year divided by 12. The maximum is 26 weeks. For example, a worker earning $1,000 a week with 7 years and 9 months would receive $7,750.
Do you get severance pay if you are laid off in Ontario?
Only in certain situations. A layoff counts as a severance if it lasts 35 or more weeks in a 52-week period, if it runs past an approved extended layoff, or if it happens because all of the business at an establishment closes permanently. You must still meet the five-year service and employer-size conditions.
Is severance pay mandatory for small businesses in Ontario?
No, not under the ESA. Severance is only required when the employer's worldwide payroll is $2.5 million or higher, or when 50 or more employees are severed within six months because all or part of the business closes for good. Smaller employers must still give termination notice or termination pay.
What is the difference between severance pay and termination pay in Ontario?
Termination pay replaces the one to eight weeks of written notice (up to 16 weeks in a mass termination) an employer must give before ending a job. Severance pay is an extra payment for employees with five or more years at a qualifying employer, meant to compensate for losses such as seniority. Eligible workers get both.
Does severance pay reduce Employment Insurance benefits?
Normally it does, because separation earnings are allocated from the week you lose your job. For now, a temporary federal measure means severance pay and other separation earnings are not deducted from EI for claims or allocations beginning from March 30, 2025, up to October 9, 2027.
When does my employer have to pay severance in Ontario?
Within seven days of your employment ending or on your next regular payday, whichever is later. Payments can be made in instalments over up to three years only with your agreement or approval from the Director of Employment Standards.
Can I lose my severance pay if I resign?
Yes, you can. Resigning on your own is not one of the events that sever employment under the ESA, unless you resign in response to a constructive dismissal. If your employer has already given you written notice, you keep severance rights by giving two weeks' written notice that takes effect during the statutory notice period.
Sources
Government of Ontario – Your guide to the Employment Standards Act: Severance pay
Government of Ontario – Your guide to the Employment Standards Act: Termination of employment
CP24 – Stelco to lay off 350 steelworkers at Hamilton plant, union says
This article was compiled by Jobsiz from the sources listed above, with AI-assisted writing and automated fact-checking. Published October 8, 2026. We update stories when new verified information becomes available.