If you’ve just been let go, one question is probably on your mind: how much am I owed? It’s a simple question with a surprisingly layered answer. In Ontario, your entitlement can come from three places: the Employment Standards Act (ESA), the common law developed by the courts, and your employment contract. Here’s how they fit together, whether you’re in Toronto, Hamilton or anywhere else in the province.
The floor: what the ESA guarantees
The ESA sets minimum standards that every employer must meet. The first is termination notice, or pay instead of notice. After three months of service, you’re entitled to one week. That rises to two weeks after one year, and then one week per full year of service, up to a maximum of eight weeks.
Some employees are also entitled to a separate payment called ESA severance pay. To qualify, you generally need at least five years of service, and your employer must have a global payroll of $2.5 million or more, or be part of a mass closure. Severance pay is one week per year of service, including partial years, up to 26 weeks.
These two amounts can add up to a meaningful sum, but they are only the minimum.
The bigger number: common law reasonable notice
Unless you signed an enforceable contract that limits you to the ESA minimums, you’re usually entitled to “reasonable notice” at common law. This is often much more generous.
There’s no fixed formula. Courts look at your age, your length of service, the nature of your role, and how easy it will be for you to find similar work. Older employees in senior or specialized roles typically receive longer notice periods. Reasonable notice commonly ranges from a few months to around 24 months, and occasionally more in exceptional cases.
Reasonable notice also isn’t just your base salary. It can include benefits, pension contributions, car allowances and, in many cases, bonuses or commissions you would have earned during the notice period.
Where your contract comes in
Many contracts include a termination clause that tries to limit you to ESA minimums. If the clause is clear and fully complies with the ESA, a court will usually enforce it. If any part of the termination language breaches the ESA, the courts can set the whole clause aside, opening the door to common law notice. This is why it’s so important to have a lawyer review your contract before accepting a package.
What can reduce what you’re owed
You have a duty to mitigate, which means making reasonable efforts to find new work. Money you earn from a new job during the notice period may reduce what your former employer owes. On the other hand, the ESA minimums are generally owed no matter what.
If your employer alleges “just cause,” the picture changes entirely. Just cause is a very high bar, and our article on the limits of just cause terminations explains why employers often struggle to prove it.
Get your number checked
First offers are often based on ESA minimums, and many people accept them without realizing they may be entitled to more. Our guide to choosing an employment lawyer for wrongful dismissal cases explains what to look for.
Our Toronto employment lawyers review severance packages every week and can tell you quickly whether yours is fair. Learn more about our employment law services.
