When employees are terminated without cause, they are owed termination pay and may be owed severance pay. Severance pay and termination pay are often thought of as the same thing and you may have heard of them collectively referred to as a “severance package”. However, severance pay and termination pay are distinct. Although they often work hand in hand, they are two different things.


Termination Pay

Termination pay is the payment an employer must give in lieu of giving the employee notice of their employment termination. The minimum termination pay is set out in the Employment Standards Act (ESA), but often an employment contract will stipulate how much notice an employee should be given, and thus, how much pay should be given in lieu of notice.

If the employment contract is silent on this issue, then the ESA governs. If the employment contract gives pay in lieu of notice below the requirements of the ESA, then the term in the contract is void and the ESA will set out what is owed to the employee.

The employer notice period under the Employment Standards Act varies depending on your period of employment. For example, if an employee has worked for a period of 5 years or more, but fewer than 6 years, the required notice would be at least five weeks. Therefore, the employer would have to provide a lump sum equal to the amount the employee would have been entitled to receive (in this example, 5 weeks) had notice not been given.

If you are unsure how much termination pay you are owed or you have been paid below the ESA minimum requirements, please give us a call.

In addition to the minimum notice periods set out in the ESA, there is common law notice (which can be also referred to as termination pay). Common law notice is where the court can provide a significantly longer notice period above the ESA minimums. To understand how much notice you are entitled to, and thus how much termination pay you are owed, give us a call.


Severance Pay

Under the Employment Standards Act, severance pay is compensation paid to an employee whose employment has been severed by their employer. It is meant to compensate long-term employees for losses upon termination.

The main difference between severance pay and termination pay is that severance pay is compensation that an employer must pay to a qualifying employee who has been dismissed in addition to what is required by statutory notice obligations (ESA guidelines for termination pay).

The minimum severance pay set out in the ESA applies for employees who have worked for five years of more and either:

  • Were employed by a company who had a payroll of $2.5 million or more; or
  • 50 or more employees were laid off within a 6-month period.

If the following criteria are met, the employee is owed 1 week of notice and/or severance pay for every year of service, up to a total of 26 weeks.

The Employment Standards Act sets only the minimum requirements for severance.

Like “termination pay”, the term “severance pay” can also refer to common law notice of termination. Accordingly, you may be entitled to a bigger severance payment than your employer offers. Determining whether you have received a fair severance payment is a complex matter. Get in touch with one of our experience employment lawyers today to ensure you are getting the maximum amount. You can also learn more about severance pay here (link to Severance Pay blog).



While termination and severance are often thought of as the same thing, they are two distinct things with different purposes. Termination pay is paid in lieu of notice of termination whereas severance is owed to severed employees who meet the criteria set out in the ESA