How much severance pay is owed in Ontario?
Severance pay in Ontario is set, at a minimum, by the Employment Standards Act (ESA): one week of regular wages for each completed year of service, plus a fraction for completed months, up to 26 weeks. It applies only after five years with an employer that has a global payroll of $2.5 million or more, or a closure that severed at least 50 jobs. Most people who lose a job are also owed a second, separate amount: termination pay for the notice weeks the employer did not give.
This severance pay calculator works out both ESA amounts from the length of employment, the regular weekly wage and how the job ended. It shows each rule it applied, which tests are met, and a table of the ESA minimum at every common length of service. It does not estimate common-law “reasonable notice”, which courts set case by case and which is often higher than the ESA floor.
How do you use this severance pay calculator?
- Enter the length of employment. Use completed years and months up to the last day of work. Time off sick, on leave or on temporary lay-off still counts while the job continued.
- Choose how pay works. Hourly workers enter the regular rate and usual weekly hours. Salaried workers enter the yearly salary. For commission or shifts that vary, enter regular wages from the last 12 weeks and the weeks actually worked.
- Pick the employer size. Severance pay needs a global payroll at or above the ESA threshold, or a permanent closure that severed 50 or more jobs in six months. Choose “Not sure” to see severance as a separate “if eligible” figure.
- Say what notice was given. No notice, some written notice, or full notice worked to the end.
- Open the advanced options if needed. An exemption, a mass termination at the workplace or a contract vacation pay rate change the result.
The result shows the total ESA minimum first, then termination pay, severance pay, the weekly wage, the eligibility checklist and the table by years of service. Nothing entered is sent anywhere or stored.
What does a worked example look like?
Take an Ontario employee earning $25.00 an hour for 40 hours a week, with 7 years and 9 months of service, let go with no written notice by an employer with a global payroll above the threshold.
| Step | Calculation | Amount |
|---|---|---|
| Regular weekly wage | $25.00 × 40 hours | $1,000.00 |
| Notice required | 7 to under 8 years of service | 7 weeks |
| Termination pay | 7 weeks, none worked | $7,000.00 |
| Vacation pay on termination pay | 6% after five years | $420.00 |
| Severance service | 7 years, 9 months plus 7 notice weeks (about 2 months) | 7 years, 11 months |
| Severance pay | 7 + 11 ÷ 12 = 7.92 weeks | $7,920.00 |
| Total ESA minimum | Termination pay + vacation pay + severance pay | $15,340.00 |
That total equals about 15.3 weeks of regular pay. One more year of service would raise it to $17,400.00, because the notice rises to eight weeks and severance to 8.92 weeks. If the employer’s payroll were under the threshold with no qualifying closure, severance would drop out and the minimum would be $7,420.00.
How much notice does the ESA require?
Written notice, or termination pay in its place, depends on the period of employment. An employee needs at least three months of continuous employment to qualify. The chart stops at eight weeks, however long the service; severance pay is what keeps growing after that.
How to read this table: find the row for the length of employment. An employer can combine working notice and termination pay, as long as the two add up to the weeks in this chart.
| Period of employment | Notice or termination pay |
|---|---|
| Less than 1 year | 1 week |
| 1 year but less than 3 years | 2 weeks |
| 3 years but less than 4 years | 3 weeks |
| 4 years but less than 5 years | 4 weeks |
| 5 years but less than 6 years | 5 weeks |
| 6 years but less than 7 years | 6 weeks |
| 7 years but less than 8 years | 7 weeks |
| 8 years or more | 8 weeks |
Source: Your guide to the Employment Standards Act, Termination of employment — ontario.ca (three months' continuous employment); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (notice chart); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (termination pay defined); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (notice and termination pay combined); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (regular wages); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (regular work week); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (no regular work week, 12-week average); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (worked example, Sarah); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (worked example, Gerry); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (when termination pay is due); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (mass termination notice); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (mass termination definition); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (mass termination exception); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (exemptions from notice and termination pay); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (temporary lay-off length); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (common law and wrongful dismissal); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (court or ministry claim, not both); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (Employment Standards Information Centre); Your guide to the Employment Standards Act, Severance pay — ontario.ca (severance vs termination pay); Your guide to the Employment Standards Act, Severance pay — ontario.ca (qualifying for severance pay); Your guide to the Employment Standards Act, Severance pay — ontario.ca (amount of severance pay); Your guide to the Employment Standards Act, Severance pay — ontario.ca (worked example, Susan); Your guide to the Employment Standards Act, Severance pay — ontario.ca (notice period counts toward severance); Your guide to the Employment Standards Act, Severance pay — ontario.ca (worked example, Alex); Your guide to the Employment Standards Act, Severance pay — ontario.ca (worked example, Kwesi); Your guide to the Employment Standards Act, Severance pay — ontario.ca (long lay-off counts as severance); Your guide to the Employment Standards Act, Severance pay — ontario.ca (when severance pay is due); Your guide to the Employment Standards Act, Severance pay — ontario.ca (installments); Your guide to the Employment Standards Act, Severance pay — ontario.ca (resigning after notice keeps severance); Your guide to the Employment Standards Act, Severance pay — ontario.ca (exemptions from severance pay); Your guide to the Employment Standards Act, Severance pay — ontario.ca (construction and misconduct exemptions); Your guide to the Employment Standards Act, Severance pay — ontario.ca (refused reasonable alternative employment); Your guide to the Employment Standards Act, Severance pay — ontario.ca (common law rights may be greater); Your guide to the Employment Standards Act, Vacation — ontario.ca (vacation pay percentages); Your guide to the Employment Standards Act, Vacation — ontario.ca (vacation pay on termination pay, not severance pay); Temporary Employment Insurance measures — Canada.ca (separation earnings normally allocated); Temporary Employment Insurance measures — Canada.ca (allocation suspended for a limited window). In effect from July 23, 2026; checked October 11, 2026.
When an employer terminates 50 or more employees at one establishment within four weeks, the mass termination rules replace the chart. The notice then depends on how many people are let go, not on each person’s service. An exception applies when the terminations are not more than 10 per cent of the employees at that establishment and none is caused by a closure.
How to read this table: the same notice applies to every affected employee, and the employer must file a Form 1 with the Director of Employment Standards.
| Employees terminated in four weeks | Notice required |
|---|---|
| 50 to 199 employees | 8 weeks |
| 200 to 499 employees | 12 weeks |
| 500 or more employees | 16 weeks |
Source: Your guide to the Employment Standards Act, Termination of employment — ontario.ca (three months' continuous employment); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (notice chart); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (termination pay defined); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (notice and termination pay combined); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (regular wages); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (regular work week); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (no regular work week, 12-week average); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (worked example, Sarah); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (worked example, Gerry); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (when termination pay is due); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (mass termination notice); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (mass termination definition); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (mass termination exception); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (exemptions from notice and termination pay); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (temporary lay-off length); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (common law and wrongful dismissal); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (court or ministry claim, not both); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (Employment Standards Information Centre); Your guide to the Employment Standards Act, Severance pay — ontario.ca (severance vs termination pay); Your guide to the Employment Standards Act, Severance pay — ontario.ca (qualifying for severance pay); Your guide to the Employment Standards Act, Severance pay — ontario.ca (amount of severance pay); Your guide to the Employment Standards Act, Severance pay — ontario.ca (worked example, Susan); Your guide to the Employment Standards Act, Severance pay — ontario.ca (notice period counts toward severance); Your guide to the Employment Standards Act, Severance pay — ontario.ca (worked example, Alex); Your guide to the Employment Standards Act, Severance pay — ontario.ca (worked example, Kwesi); Your guide to the Employment Standards Act, Severance pay — ontario.ca (long lay-off counts as severance); Your guide to the Employment Standards Act, Severance pay — ontario.ca (when severance pay is due); Your guide to the Employment Standards Act, Severance pay — ontario.ca (installments); Your guide to the Employment Standards Act, Severance pay — ontario.ca (resigning after notice keeps severance); Your guide to the Employment Standards Act, Severance pay — ontario.ca (exemptions from severance pay); Your guide to the Employment Standards Act, Severance pay — ontario.ca (construction and misconduct exemptions); Your guide to the Employment Standards Act, Severance pay — ontario.ca (refused reasonable alternative employment); Your guide to the Employment Standards Act, Severance pay — ontario.ca (common law rights may be greater); Your guide to the Employment Standards Act, Vacation — ontario.ca (vacation pay percentages); Your guide to the Employment Standards Act, Vacation — ontario.ca (vacation pay on termination pay, not severance pay); Temporary Employment Insurance measures — Canada.ca (separation earnings normally allocated); Temporary Employment Insurance measures — Canada.ca (allocation suspended for a limited window). In effect from July 23, 2026; checked October 11, 2026.
Who qualifies for severance pay in Ontario?
Severance pay has three tests, and all must be met:
- Employment is severed. The employer dismisses the employee, constructively dismisses them and they resign within a reasonable time, lays them off for 35 or more weeks in 52 consecutive weeks, or closes the whole business at an establishment permanently.
- Five or more years of employment. All time with the employer counts, whether continuous or not and whether active or not, and the statutory notice period counts too.
- A large enough employer. The employer has a global payroll of at least $2.5 million (wages paid everywhere, not only in Ontario), or severed the employment of 50 or more employees in six months because all or part of the business permanently closed.
The calculator’s eligibility table marks each test as met, not met or unknown for the answers entered. An employee who fails the employer test still receives termination pay or notice.
How is severance pay calculated?
Severance pay is the regular weekly wage multiplied by completed years of employment plus completed months divided by 12. The notice period, worked or paid in lieu, is part of that service. The result is capped at 26 weeks of wages.
“Regular wages” leave out overtime, vacation pay, public holiday pay and premium pay. For someone who works the same hours each week, the regular work week is those hours without overtime. For commission earners and people with uneven hours, the ESA uses the average of regular wages in the weeks actually worked during the 12 weeks before notice was given.
ontario.ca publishes five worked examples. The calculator reproduces each one to the cent, and the test file checks them every time the rules are updated:
| ontario.ca example | Inputs | Official result |
|---|---|---|
| Sarah (termination pay) | $20.00 an hour, 40 hours, 3½ years, no notice, 4% vacation pay | $2,496.00 |
| Gerry (termination pay, uneven hours) | $1,800.00 over 10 weeks worked, 4 years, 6% vacation pay | $763.20 |
| Susan (severance, notice worked) | $1,000.00 a week, 7 years 9 months at the end of notice | $7,750.00 |
| Alex (severance, pay in lieu) | $1,000.00 a week, 10 years plus 8 weeks’ pay in lieu | $10,170.00 |
| Kwesi (severance, commission) | $7,723.00 in 12 weeks, 9 years 6 months | $6,114.01 |
ESA minimum by years of service
The table below adds termination pay, vacation pay and severance pay together at each length of service, for a regular weekly wage of $1,000.00, no working notice, and an employer that meets the payroll test. Multiply by the ratio of another weekly wage to scale it.
| Years of service | Notice weeks | Termination + vacation pay | Severance pay | ESA total |
|---|---|---|---|---|
| 1 | 2 | $2,080 | None (under five years) | $2,080 |
| 3 | 3 | $3,120 | None (under five years) | $3,120 |
| 5 | 5 | $5,300 | $5,080 | $10,380 |
| 8 | 8 | $8,480 | $8,170 | $16,650 |
| 10 | 8 | $8,480 | $10,170 | $18,650 |
| 15 | 8 | $8,480 | $15,170 | $23,650 |
| 20 | 8 | $8,480 | $20,170 | $28,650 |
| 26 or more | 8 | $8,480 | $26,000 | $34,480 |
Two things stand out. Notice stops at eight weeks, so from eight years on only severance pay grows. And severance pay starts in full at five years: the step from four to five years of service more than doubles the ESA minimum. Anyone close to a five-year anniversary can check whether the notice period carries the service past it, because the ESA counts those weeks.
What is the difference between termination pay and severance pay?
Termination pay and severance pay are two separate ESA entitlements. Termination pay is a lump sum equal to regular wages for the notice weeks an employer did not give, and it earns vacation pay. Severance pay compensates long-service employees for losses such as seniority, and it does not earn vacation pay.
| Termination pay | Severance pay | |
|---|---|---|
| Purpose | Replaces written notice | Compensates for the loss of a long-term job |
| Service needed | Three months | Five years |
| Employer test | None | Payroll or closure test |
| Size | One to eight weeks (more in a mass termination) | Up to 26 weeks |
| Vacation pay on it | Yes | No |
| Can be replaced by working notice | Yes | No |
Can common-law notice be higher than the ESA minimum?
Common-law reasonable notice can be higher, often much higher, than the ESA minimum. The ESA guide calls its termination and severance rules minimum requirements and says some employees have greater rights under the common law. Courts set reasonable notice case by case, looking at factors such as age, length of service, the job and how hard similar work is to find, so this calculator does not estimate it.
There is also a choice to make. An employee cannot sue for wrongful dismissal in court and also file an ESA claim for termination or severance pay for the same job loss; it has to be one or the other. Before signing a release or accepting a package, an employment lawyer can compare an offer with what a court might award, and the Employment Standards Information Centre (1-800-531-5551) can explain the ESA rules. This page is general information, not legal advice.
How do severance and termination pay affect EI?
Service Canada normally allocates separation earnings, including pay in lieu of notice, severance pay and vacation pay, from the week of the separation. In practice that pushes back the start of EI payments. Under a temporary measure, these earnings are not deducted for EI claims or allocations that start between March 30, 2025 and October 9, 2027, according to Canada.ca. Canada.ca previously gave October 10, 2026 as the end of the window; whether it is extended again is a federal decision. The EI calculator estimates the weekly benefit and number of weeks, and Service Canada decides the allocation on a real claim.
Is severance pay taxable in Ontario?
Termination pay and severance pay are taxable income, and the employer withholds income tax when it pays them. A large payout in one year can move part of that year’s income into a higher bracket. The Ontario income tax calculator estimates the tax on a year’s total income, including a payout. Some people also look at unused RRSP room, since an RRSP contribution is deductible, or at the TFSA contribution limit for parking part of a lump sum; a tax professional can say what fits a specific situation.
Which employees are exempt?
ontario.ca lists exemptions for both entitlements and calls many of them complex. The main ones are summarised below; the Employment Standards Information Centre can say whether one applies.
How to read this table: each row is a situation ontario.ca lists as exempt. Wilful misconduct must be more than trivial and not condoned; poor performance alone is generally not wilful.
| Situation | Notice or termination pay | Severance pay |
|---|---|---|
| Wilful misconduct, disobedience or wilful neglect of duty that is not trivial and not condoned | Not entitled | Not entitled |
| Employed in construction | Not entitled | Not entitled |
| Refused an offer of reasonable alternative employment | Not entitled | Not entitled |
| Employed less than three months | Not entitled | Not entitled (five years needed) |
| On a temporary lay-off | Not entitled | Not a severance |
| Retires on a full pension recognizing all years of service (CPP does not count) | Depends on the situation | Not entitled |
| Contract frustrated by an unforeseen event such as a fire or flood (not bankruptcy, illness or injury) | Not entitled | Not entitled |
Source: Your guide to the Employment Standards Act, Termination of employment — ontario.ca (three months' continuous employment); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (notice chart); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (termination pay defined); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (notice and termination pay combined); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (regular wages); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (regular work week); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (no regular work week, 12-week average); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (worked example, Sarah); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (worked example, Gerry); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (when termination pay is due); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (mass termination notice); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (mass termination definition); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (mass termination exception); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (exemptions from notice and termination pay); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (temporary lay-off length); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (common law and wrongful dismissal); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (court or ministry claim, not both); Your guide to the Employment Standards Act, Termination of employment — ontario.ca (Employment Standards Information Centre); Your guide to the Employment Standards Act, Severance pay — ontario.ca (severance vs termination pay); Your guide to the Employment Standards Act, Severance pay — ontario.ca (qualifying for severance pay); Your guide to the Employment Standards Act, Severance pay — ontario.ca (amount of severance pay); Your guide to the Employment Standards Act, Severance pay — ontario.ca (worked example, Susan); Your guide to the Employment Standards Act, Severance pay — ontario.ca (notice period counts toward severance); Your guide to the Employment Standards Act, Severance pay — ontario.ca (worked example, Alex); Your guide to the Employment Standards Act, Severance pay — ontario.ca (worked example, Kwesi); Your guide to the Employment Standards Act, Severance pay — ontario.ca (long lay-off counts as severance); Your guide to the Employment Standards Act, Severance pay — ontario.ca (when severance pay is due); Your guide to the Employment Standards Act, Severance pay — ontario.ca (installments); Your guide to the Employment Standards Act, Severance pay — ontario.ca (resigning after notice keeps severance); Your guide to the Employment Standards Act, Severance pay — ontario.ca (exemptions from severance pay); Your guide to the Employment Standards Act, Severance pay — ontario.ca (construction and misconduct exemptions); Your guide to the Employment Standards Act, Severance pay — ontario.ca (refused reasonable alternative employment); Your guide to the Employment Standards Act, Severance pay — ontario.ca (common law rights may be greater); Your guide to the Employment Standards Act, Vacation — ontario.ca (vacation pay percentages); Your guide to the Employment Standards Act, Vacation — ontario.ca (vacation pay on termination pay, not severance pay); Temporary Employment Insurance measures — Canada.ca (separation earnings normally allocated); Temporary Employment Insurance measures — Canada.ca (allocation suspended for a limited window). In effect from July 23, 2026; checked October 11, 2026.
Federally regulated workplaces, such as banks, telecommunications and interprovincial transport, follow the Canada Labour Code instead of the Ontario ESA.
How does the maths work?
In plain English, the calculator does five things:
- Weekly wage. Hourly rate × regular hours, salary ÷ 52, or regular wages in the last 12 weeks ÷ weeks worked. The result is rounded to the cent, as ontario.ca does.
- Notice. The ESA chart (or the mass termination scale) gives the notice weeks. Working notice already given is subtracted; the rest becomes termination pay.
- Vacation pay. At least 4% of termination pay, or 6% after five years, or a contract rate entered in the advanced options.
- Severance. The unworked notice weeks are added to the service, then weekly wage × (completed years + completed months ÷ 12), capped at 26 weeks, if every test is met.
- Total and tables. The amounts are added, then the same steps run for common lengths of service and for working the notice instead of taking pay in lieu.
What are common mistakes with Ontario severance pay?
- Treating termination pay and severance pay as the same thing. An eligible employee is owed both.
- Stopping the service count at the last day of work. The ESA adds the statutory notice period to the service for severance, even when it was paid instead of worked.
- Using gross pay with overtime. Regular wages leave out overtime, vacation pay and public holiday pay, so a weekly figure with overtime overstates the ESA amount.
- Forgetting vacation pay on termination pay. It is at least 4%, and it is owed on top. Earned vacation pay not yet paid is also owed when the job ends; the guide to Ontario minimum wage rates and ESA pay rules covers the related pay rules.
- Assuming the payroll test means Ontario staff only. It counts the employer’s global payroll.
- Treating the ESA figure as the full value of a claim. Common-law notice can be higher, and choosing an ESA claim rules out a court claim for the same job loss.
When should you talk to an employment lawyer or the Ministry of Labour?
This severance pay calculator is an education tool for the ESA minimum. Consider talking to an employment lawyer before signing a release, when an offer is close to the ESA minimum after many years of service, or when the reason given for the dismissal is misconduct. The Ministry of Labour’s Employment Standards Information Centre (1-800-531-5551) answers questions about ESA rules, exemptions and filing a claim. A union representative can explain terms in a collective agreement. For planning the months after a job ends, the emergency fund calculator helps size a cash buffer.