Frequently Asked Questions Regarding Severance Pay

What is the Employment Standards Act?

The Employment Standards Act is the law that contains basic rules about employing people and working. Both employees and employers have rights and
responsibilities under the Act.
Does the Act cover all employees in Ontario?

Most employees are covered by the provincial legislation. However, employees working in industries that fall under Federal jurisdiction, such as, Post office, Banks, Railways, Radio stations, Airlines, Television stations etc. are not covered.
If you are member of the trade union and your contract of employment is governed by the collective agreement, you may not be covered by the Act.
If you are currently employed with the company, you may be able to file a claim with a request that your name not be disclosed. The Act protects you when you are exercising your rights under it.

What is Severance Pay?

Severance Pay is money paid by an employer to some workers who lose their jobs. It is paid in recognition of their years of service.
Can I get Severance Pay?

You can get severance pay only if:

.           You have workedfive or more years for your employer
.           Your employer is in one of the following two groups:
            (1)        Your employer has a payroll in Ontario of at least $2.5 million a year; or
            (2)        Your employer is no longer going to be carrying on all or part of the
                        business and 50 or more workers will lose their jobs for this reason inside
                        a six month period.
Are there other reasons why I might not get Severance Pay?

Yes. The most common reasons are that:
.           You have refused reasonable alternative employment with your employer;
.           You have refused worked available to you through seniority system;
            You are retired and collect full pension (not including a CPP pension);
.           You have been terminated during or as a result of, a strike or lockout at your place
            of work and your employer can show that the job you did no longer exists because
            of the economic effects of the strike;
.           You have been doing construction work for a contractor on the site
.           You are free to decide when you want to work and can refuse to work when you
            are offered it.
.           You were fired for wilful misconduct, disobedience or wilful neglect of duty that
            was not trivial and not condoned by your employer.
.           Your employer’s yearly payroll is less than $2.5 million, or less than 50 people
            were terminated when your employer closed don all or part of the business.
How much Severance Pay do I get?

If you qualify for severance pay, your employer will give you one week’s regular pay for each year of employment for a maximum of 26 weeks.

When do I get my Severance Pay?

Severance Pay must be paid to you on your next payday or seven days whichever, is later.
Do I get Severance Pay if I get laid off and don’t get a notice of termination?

The rules about layoff would apply.
What if I resign after I get notice?

If you resign after getting notice, you may still be entitled to severance pay.
If you or the employer disagrees with the investigating officer’s decision, both parties have a right to appeal to Ontario Labour Relations Board within 30 days of the officer’s decision. The Board appoints a referee to hear the appeal. It does not cost the employee to request an appeal but the employer may be required to deposit monies in trust with the Ministry of Labour if it is found to be owing. The referee decision is final and binding on both parties.
In the past, the Ministry was very aggressive in defending the rights of an employee and would send a legal counsel to represent the employee at the Board’s hearing to deal with the matter. It rarely does so now. Obviously, the employer has advantage over the employee in these circumstances. The question arises, should the employee also engage the services of a professional. It is my view, employee’s may not engage such services at the officer’s level hearing but may do so at the referee level hearing, particularly, if the issues are complex.
It is important that if a hearing has been scheduled, the employee must attend such a hearing to present evidence to support its position or to contest the evidence of the employer, otherwise, the officer or the referee may rely on the evidence of the employer to render a decision.
This information is provided for guidance only and should not be considered as a legal advice.

This article is provided by Rajinder K. Batra, who is a retired Employment Standards Officer with the Ministry of Labour with 15 years experience in these matters.

If you have any questions regarding your employment, please contact the writer by e-mail at

If you don’t have access to e-mail; you can fax your question at (905) 331-1805.

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