Severance Pay Estimator
Ontario Severance Pay — The Rules
Under the Employment Standards Act, 2000, Part XV (Sections 63–66), severance pay is available to employees who meet both of the following conditions:
- 5 or more years of service with the employer (including partial years)
- One of two employer thresholds is met:
- The employer's total Ontario payroll is $2.5 million or more, OR
- 50 or more employees were severed within a 6-month period
Only one employer threshold needs to be met. If both conditions are satisfied, severance pay equals one week of regular wages per year of service, capped at 26 weeks.
What counts as regular wages?
Regular wages include only your base salary or hourly earnings. The following are excluded from the severance calculation:
- Overtime pay
- Discretionary bonuses
- Performance bonuses
- Commissions
- Vacation pay loading
- Benefit valuations
- Allowances of any kind
- Tips or gratuities
severance_pay = severance_weeks × weekly_regular_wage
weekly_regular_wage = annual_salary ÷ 52
Source: Employment Standards Act, 2000, Part XV, Sections 63–66
Severance Pay vs. Termination Pay — What's the Difference?
Severance pay and termination pay are two separate ESA entitlements. An employee may be owed both. This calculator covers severance pay only.
- Severance pay compensates for long service and the loss of accumulated job benefits. It applies when the employer meets the payroll or mass layoff thresholds and the employee has 5+ years of service. Maximum: 26 weeks.
- Termination pay is pay in lieu of the written notice period the employer must provide when ending employment. It ranges from 1 to 8 weeks depending on length of service.
An employee who is terminated without proper notice may be entitled to both termination pay and severance pay. These are calculated separately under the ESA.
For termination pay calculations, visit the Ontario Termination Pay Calculator (coming soon).
Frequently Asked Questions
What is severance pay in Ontario?
Severance pay is a form of compensation under the Ontario Employment Standards Act paid to eligible employees whose employment is severed. It recognizes long service and the loss of accumulated job benefits. It is calculated as one week of regular wages per year of service, capped at 26 weeks.
How is severance pay calculated under the ESA?
Severance pay = number of years of service (including partial years) × your weekly regular wage, up to a maximum of 26 weeks. Only base wages count — overtime, bonuses, commissions, and other extras are excluded.
Is severance pay the same as termination pay?
No. Severance pay and termination pay are two distinct ESA entitlements. Termination pay compensates for lack of proper notice (1–8 weeks based on service length). Severance pay compensates for long service when employer thresholds are met (up to 26 weeks). You may be entitled to both.
What is the maximum severance pay in Ontario?
The ESA caps severance pay at 26 weeks of regular wages. Even if you have more than 26 years of service, the maximum is 26 weeks. This cap is set by the Employment Standards Act, 2000, Part XV.
Does the employer payroll threshold affect my eligibility?
Yes. To qualify for ESA severance pay, your employer must have a total Ontario payroll of $2.5 million or more, or have severed 50 or more employees within a 6-month period. If neither condition is met, you are not eligible for statutory severance pay — even with 5+ years of service.
Can my employer count partial years of service?
Yes. The ESA counts partial years in the severance calculation. For example, 7.5 years of service yields 7.5 weeks of severance pay. The decimal portion is included, not rounded down to whole years.