Termination Pay — Ontario Employment Law
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About Termination Pay
When your employment ends in Ontario, one of the first things to understand is your entitlement to termination pay. It's crucial to distinguish this from other concepts like severance pay or common law notice, as they are not the same. Termination pay is a minimum entitlement guaranteed to most employees under Ontario's Employment Standards Act, 2000 (ESA). It is designed to provide a financial cushion during the transition period after a job loss.
To be eligible for statutory termination pay, you must have been continuously employed for at least three months. The amount depends on your length of service: one week of pay with less than one year, two weeks with one year but less than three, then one week for each completed year of employment, up to a maximum of eight weeks. Only completed years count, and termination pay is never prorated. For example, an employee with 4.5 years of service is entitled to four weeks of termination pay. This 'pay' is your regular wages, including vacation pay, that you would have earned during the corresponding notice period.
An employer can satisfy this obligation in a few ways: by providing you with written 'working notice' of the same duration, by paying a lump sum 'payment in lieu of notice,' or through a combination of both. It's important to note that termination pay is a floor, not a ceiling. It represents the absolute minimum your employer must provide if they terminate you without 'just cause.' The threshold for an employer to prove just cause under the ESA is extremely high, requiring serious misconduct like theft or fraud. Poor performance rarely meets this standard. Many employees are also entitled to a much longer notice period under common law, which can result in a significantly larger payment. Because the specifics of your employment contract and termination circumstances can greatly influence your entitlements, having your situation reviewed can clarify what you are truly owed.
Frequently Asked Questions
What is the difference between termination pay and severance pay in Ontario?
Termination pay and severance pay are two separate entitlements under the Employment Standards Act (ESA). Termination pay is based on notice periods (1 week under a year of service, 2 weeks from 1 to under 3 years, then 1 week per completed year, up to 8 weeks) and applies to most employees with over 3 months of service. Severance pay is an additional entitlement for employees with 5 or more years of service if the employer has a payroll of at least $2.5 million or severed 50 or more employees within six months because all or part of the business closed.
How much termination pay am I supposed to get?
Under the ESA, you are entitled to one week of regular pay if you worked less than a year, two weeks from one year to less than three, then one week for each completed year, up to a maximum of eight weeks. For example, if you worked for five full years, you are owed a minimum of five weeks' termination pay.
My boss fired me for 'poor performance'. Do I still get termination pay?
Yes, in almost all cases. To deny you statutory termination pay, your employer must prove 'just cause' under the ESA, which means willful misconduct, disobedience, or willful neglect of duty that is not trivial. Poor performance does not typically meet this high standard.
How soon after being fired do I have to receive my termination pay?
Your employer must pay your termination pay either on your next regular payday or within seven days of your employment ending, whichever is later. This is a strict deadline under the ESA.
Are there jobs that are not entitled to termination pay in Ontario?
Yes, the ESA has some exemptions. For example, certain construction employees, employees guilty of willful misconduct, and those who have worked less than three months are not entitled to termination pay. The rules can be complex, so it's wise to confirm if an exemption truly applies to your role.
I was only offered 2 weeks of pay but I worked for 3 years. When should I talk to a lawyer?
You should consider seeking legal advice immediately. If your employer's offer is less than your minimum entitlements under the ESA (which would be 3 weeks' pay in your case), it is non-compliant. A lawyer can also assess if you are owed a greater amount of notice or pay under common law.
Common Scenarios
- A restaurant server with 4 years of service is let go during a slow season and is offered only two weeks of pay, less than their ESA minimum.
- An office administrator with 10 years of service is terminated and offered 8 weeks' pay, but they believe they are entitled to more based on common law reasonable notice.
- A journeyman electrician is terminated and told their trade is exempt from termination pay, leaving them with no income replacement.
- A marketing manager is fired for not meeting aggressive sales targets and is denied termination pay, with the employer incorrectly claiming 'just cause'.
- An employee is given 'working notice' but their duties are drastically changed, potentially turning the situation into a constructive dismissal.
What You Should Know
- Check the payment deadline carefully; the ESA requires employers to issue your termination pay either seven days after your employment ends or on your next regular pay date, whichever is later.
- Do not assume the ESA minimums are all you deserve, as consulting an employment lawyer can reveal whether you are entitled to a far larger package under common law reasonable notice.
- Ensure your payout accounts for more than just your base salary; termination pay must also reflect vacation pay that would have accrued and regular commissions you would have earned during the statutory notice period.
- Verify your exact start and end dates with old emails or contracts, as being just one day short of an employment anniversary means you lose out on an entire week of statutory termination pay.
Featured Cases
B.A.C. v. Automobile Specialties Inc. et al
2026 ONSC 3956 (CanLII) · 2026-07-07Constructive Dismissal: Common Employer Liability & Bad Faith Damages
This is a default judgment case involving wrongful and constructive dismissal claims against an employer and related entities. The court found the defendants liable under the common employer doctrine and awarded damages for constructive dismissal, including unpaid wages, eight weeks of termination pay, and additional damages for bad faith conduct.
D. v. Transasian Fine Cars Ltd.
2025 ONSC 7382 (CanLII) · 2025-03-25ESA Termination & Severance: Frustration of Contract
This is an interlocutory application concerning the calculation of termination pay and severance pay under the Employment Standards Act, 2000, following a frustration of contract due to disability. The court addressed whether 'regular wages' for these statutory entitlements should be based on pre-injury earnings or the accommodated reduced-rate earnings from the last 12 weeks worked. The application was dismissed, with the court applying a plain reading of the statute and precedent from Hoekstra v. Rehability to calculate payments based on the last 12 weeks worked.
Maynard v. Johnson Controls Canada LP
2023 ONCA 392 (CanLII) · 2023-05-31Maynard v. Johnson Controls: Severance Pay Appeal
This is an appeal from a summary judgment decision concerning the calculation of termination pay and severance under an employment agreement. The Court of Appeal for Ontario dismissed the appeal, upholding the lower court's finding that the employer's Share and Incentive Plan forfeiture provision was undisclosed and that RSUs and bonuses must be included in the para. 16 payment calculation. The court also rejected the employer's argument that the agreement limited entitlements to Employment Standards Act minimums.
Nordstrom Canada Retail, Inc.
2023 ONSC 1422 (CanLII) · 2023-03-03CCAA: Employee Trust for Severance Pay
This is an interlocutory proceeding in a CCAA insolvency case where the court addressed the wind-down of Nordstrom Canada's operations. A key issue was the approval of an Employee Trust to ensure financial security for employees and compliance with employment standards legislation regarding termination and severance pay during the liquidation process.
Clarion Lakeside Inn v. UFCW Local 175
2022 ONSC 3850 (CanLII) · 2022-06-30Judicial Review: Termination Pay & Frustration of Contract
This is a judicial review application concerning a labour arbitrator's award of termination pay to employees whose employment was deemed frustrated by a fire causing temporary closure. The Divisional Court reviewed whether the arbitrator's interpretation of the Employment Standards Act and the common law test for frustration was reasonable.
Render v. ThyssenKrupp Elevator (Canada) Limited
2022 ONCA 310 (CanLII) · 2022-04-20Dismissal for Cause: ESA Termination Pay & Costs
This appeal concerns an operations manager with 30 years of service who was dismissed for cause after slapping a female co-worker on the buttocks. The Court of Appeal upheld the trial judge's finding of just cause under the McKinley contextual analysis, but held that the conduct was not wilful misconduct under the ESA regulation, so the employee was entitled to eight weeks' termination pay; severance pay was not awarded because the record did not show the employer's $2.5 million payroll. The court dismissed the appeal on punitive damages and set aside the trial costs award against the employee because of the employer's litigation misconduct.
AWC Manufacturing LP v. L.
2021 ONSC 7357 (CanLII) · 2021-11-05Judicial Review: Wilful Misconduct & Severance Pay
This is a judicial review proceeding where the employer sought to overturn an Ontario Labour Relations Board decision that upheld an employee's entitlement to termination and severance pay. The central issue was whether the Board reasonably interpreted 'wilful misconduct' to justify withholding pay for threats made outside work hours while intoxicated, applying a reasonableness standard of review.
H. v Rehability Occupational Therapy Inc.
2019 ONSC 562 (CanLII) · 2019-01-21Frustration of Contract: Medical Leave Termination
This is a merits decision regarding the frustration of an employment contract due to the plaintiff's prolonged medical leave. The court found the contract frustrated as of October 19, 2016, based on medical evidence, and determined the plaintiff was entitled to termination and severance pay under the Employment Standards Act, 2000. The court rejected claims for aggravated and punitive damages, finding the defendant's conduct was not malicious, and awarded the plaintiff $15,000 in costs on a partial indemnity basis.
N. v. Canadian Back Institute
2018 ONSC 2882 (CanLII) · 2018-05-09ESA Sale of Business: Termination Pay
This case concerns a Deputy Judge's decision regarding employees' entitlement to termination pay under the Employment Standards Act, 2000. The central issue was whether the termination of employees and their hiring by a competitor constituted a 'sale of a business' under section 9 of the Act. The court applied governing principles from Abbott v. Bombardier and found no sale of a business due to the absence of asset transfers, personnel files, or contractual obligations between the parties.
P. v. Wittman Canada Inc.
2018 ONSC 631 (CanLII) · 2018-01-26P. v. Wittman: Constructive Dismissal & ESA
The Divisional Court dismissed an appeal concerning a constructive dismissal claim where an employee was laid off after a temporary lay-off period. The court upheld the trial judge's finding that the employment contract displaced the Employment Standards Act, 2000 termination provisions because the contract terms were more beneficial to the employee. The appeal was dismissed, confirming the employee's entitlement to termination pay.
P. v Wittman Canada Inc.
2017 ONSC 3252 (CanLII) · 2017-05-26Constructive Dismissal: 8 Weeks ESA Notice Awarded
This case addresses whether a temporary lay-off constituted constructive dismissal where the employment contract was silent on lay-offs. The court also determined that the employment contract incorporated ESA notice provisions, entitling the plaintiff to damages equivalent to eight weeks' notice, and ruled that the claim for these damages was not dismissed despite pleading technicalities.
P. v. Dan Kane Chevrolet
2016 ONSC 7524 (CanLII) · 2016-12-02ESA Termination: Re-entry Program Not Dismissal
This is a merits decision by the Divisional Court regarding whether an employee's placement in a Labour Market Re-entry Program constituted termination or constructive dismissal under the Employment Standards Act. The court found that the employer did not terminate or dismiss the employee, and that the employment relationship continued despite the absence due to a compensable workplace injury. Consequently, the claims for termination pay and severance pay were dismissed.
C. v. Brains II Canada, Inc
2016 ONSC 3614 (CanLII) · 2016-05-31Wrongful Dismissal: 6.5-Year Employee Termination Pay Appeal
This appeal concerns a wrongful dismissal claim where the plaintiff was terminated after 6.5 years of service. The Divisional Court reviewed the motion judge's findings regarding the plaintiff's entitlement to termination pay under the Employment Standards Act, 2000, the validity of a termination clause that contracted out of statutory minimums, and the plaintiff's reasonable efforts to mitigate damages through job searching and retraining.
Estate of C.D. v Dick Engineering Inc.
2015 ONSC 2843 (CanLII) · 2015-04-30Frustration of Contract: Termination & Severance Pay
This case addresses whether an employment contract was frustrated by an employee's terminal cancer and whether the employee's estate was entitled to termination and severance pay under the Employment Standards Act. The court determined that the illness frustrated the contract but held the estate entitled to statutory termination and severance pay. Additionally, the court addressed a separate issue regarding a sale of business, finding no termination or constructive dismissal occurred when the purchaser did not offer employment to the employee on sick leave.
K. v. 1416088 Ontario Ltd.
2014 ONSC 1445 (CanLII) · 2014-03-25Wrongful Dismissal: 38-Year Employee Common Employer Liability
This wrongful dismissal case involved a plaintiff terminated without cause after 38 years of employment who sought statutory termination pay, vacation pay, and pay in lieu of notice. The court applied the common employer doctrine and successor employer liability principles to hold multiple interconnected companies jointly liable for the employment obligations.
M. v. Selectrucks of Toronto Inc.
2011 ONSC 6128 (CanLII) · 2011-10-14Constructive Dismissal: Voluntary Resignation vs. Fundamental Breach
This case addresses whether the plaintiff was constructively dismissed or voluntarily resigned following allegations of managerial mistreatment and corporate reorganization. The court applied the Farber v. Royal Trust Co. test and determined that the plaintiff voluntarily resigned to pursue another opportunity, thereby negating the constructive dismissal claim. However, the plaintiff was awarded two weeks' notice pay based on an annualized income of $160,000, along with unpaid commissions and holiday pay.
O. v. FAG Aerospace Inc.
2011 ONSC 1538 (CanLII) · 2011-03-14Wrongful Dismissal: Just Cause and Statutory Pay
This wrongful dismissal case addressed whether the plaintiff's conduct constituted just cause for termination or disentitled him to statutory termination and severance pay under the Employment Standards Act, 2000. The court found that while the plaintiff's conduct was careless, it did not amount to wilful misconduct. Consequently, the plaintiff was awarded statutory termination and severance pay based on his length of service.
Re: Canwest Global Communications Corp.
2010 ONSC 1746 (CanLII) · 2010-06-14CCAA Stay of Severance and Termination Pay Claims
This is an interlocutory ruling concerning the application of the Companies' Creditors Arrangement Act (CCAA) to employee severance and termination pay obligations. The court addressed whether pre-filing severance claims are stayed and subject to compromise as unsecured claims, and whether post-filing incremental severance obligations are excluded from the stay.
Windsor Machine & Stamping Limited (Re)
2009 CanLII 39771 (ON SC) · 2009-07-27CCAA: Termination & Severance Pay Priority
This is a procedural and substantive ruling in CCAA proceedings concerning the treatment of termination and severance pay claims for employees terminated post-filing. The court addressed whether such claims are subject to stay provisions under the CCAA and whether secured creditors' priority should be recognized over these unsecured employment claims.
Nortel Networks Corporation (Re)
2009 CanLII 31600 (ON SC) · 2009-06-18This is an interlocutory ruling in CCAA proceedings concerning the priority and enforceability of employee claims for termination and severance pay against a restructuring employer. The court addressed whether the CCAA stay of proceedings precludes immediate payment of pre-filing employment obligations and whether statutory employment standards override the stay. The court held that Section 11.3 of the CCAA applies only to post-filing services, staying pre-filing obligations, but authorized the monitor to assess partial distributions for employees demonstrating financial hardship.