Severance Offer in Ontario? Read First

Check three things before you sign: that the package pays at least your Employment Standards Act minimums for notice and severance, what rights the release asks you to give up, and how much time you have to decide. The ESA minimums cannot be waived, even by a signed agreement, but the release can give up any larger claim you may have in court, such as a claim for reasonable notice.

A package often arrives in a short meeting, with a letter, a release and a deadline. For employees who are newer to Canada, including Persian-speaking newcomers working across Toronto and York Region, the rules can be unfamiliar, and the letter may use terms like "working notice", "lump sum" and "full and final release" without explaining them. This guide explains the minimums in Ontario's Employment Standards Act (ESA), what the province itself says about greater rights, and the deadlines that keep running while you think. Our main page on employment disputes covers the wider picture.

What does the ESA guarantee at a minimum?

ESA notice of termination (or pay instead) by length of employment
Period of employment	Minimum notice or termination pay	Section
Less than 3 months	None under s. 54 (it applies after three months)	ESA s. 54
3 months to less than 1 year	1 week	s. 57(a)
1 to less than 3 years	2 weeks	s. 57(b)
3 to less than 4 years	3 weeks	s. 57(c)
4 to less than 5 years	4 weeks	s. 57(d)
5 to less than 6 years	5 weeks	s. 57(e)
6 to less than 7 years	6 weeks	s. 57(f)
7 to less than 8 years	7 weeks	s. 57(g)
8 years or more	8 weeks	s. 57(h)

Notice can be given as working time or replaced by a lump sum of termination pay, and the employer must keep up benefit plan contributions for the notice period either way (ss. 60, 61). Larger terminations of 50 or more employees have their own notice rules (s. 58).

Severance pay is a separate entitlement. It applies if you worked for the employer for five years or more and either the employer has a payroll of $2.5 million or more, or you are one of 50 or more employees let go within six months because all or part of the business at an establishment closed permanently (s. 64(1)). It equals your regular weekly wages multiplied by your completed years plus completed months divided by 12 (s. 65(1)), and all time worked counts, whether or not continuous (s. 65(2)), subject to the limits in the Act.

What does a release give up?

Section 5(1) of the ESA says no employer or employee may contract out of or waive an employment standard, and any such waiver is void. So a release cannot take away your ESA minimums. What it can do is give up everything else. The province's ESA guide says the termination and severance rules are minimum requirements, and that some employees have rights under the common law or other legislation that give them more; because those rights generally cannot be enforced under the ESA, some employees choose to sue for wrongful dismissal. A signed release usually ends that option. The province's claim page adds that you may have greater rights under an employment contract, a collective agreement, the common law or other legislation, and suggests contacting a lawyer if you have questions about your entitlements.

Releases are often written broadly. Read yours for what it covers, and check whether it mentions human rights claims, bonuses, commissions, stock options or benefits. If the package includes money beyond the ESA minimums, that extra amount is what the employer is paying for the release.

How should you review an offer, step by step?

Reviewing a severance offer in Ontario
Step	What to check	Rule
1. Your dates	Start date, any earlier periods with the same employer, and the termination date	ESA ss. 57, 65(2)
2. ESA minimums	Notice or termination pay, benefits for the notice period, and severance pay if you qualify	ss. 57, 60, 61, 64, 65
3. What is conditional	Which payments depend on signing the release; ESA amounts cannot be conditional on a waiver	s. 5(1)
4. What the release covers	Every claim it gives up, including human rights and court claims	Common law and other legislation (ontario.ca ESA guide)
5. Deadlines	The employer's response date, and the legal deadlines that keep running	Limitations Act s. 4; Human Rights Code s. 34; ESA s. 96(3)
6. Choose a route	An ESA claim and a court claim for the same termination block each other	ESA ss. 97, 98

Which deadlines keep running while you decide?

A court claim generally must be started within two years after the claim was discovered (Limitations Act, 2002, s. 4).
An ESA complaint about a contravention more than two years old is deemed not filed (ESA s. 96(3)).
A human rights application must be made within one year after the incident, or the last of a series, unless the Tribunal accepts a good-faith delay without substantial prejudice (Human Rights Code s. 34(1), (2)).

An employer's deadline to accept an offer is not a legal deadline, but declining to sign by that date may mean the offer is withdrawn, leaving you with the ESA minimums and whatever claim you choose to bring. The choice between an ESA claim and a lawsuit is explained in our guide on Ministry of Labour claims versus lawsuits.

What if you were laid off rather than fired?

A lay-off can turn into a termination under the ESA. A temporary lay-off is generally one of not more than 13 weeks in any 20 consecutive weeks, or longer in limited cases such as where the employer keeps paying substantial amounts or benefits, or recalls the employee within an approved time (s. 56(2)). A lay-off longer than a temporary lay-off counts as a termination, which brings in the notice and termination pay rules (s. 56(1)(c)). For severance pay, a lay-off of 35 or more weeks in any 52 consecutive weeks, or a lay-off because all of the business at an establishment closed permanently, counts as a severance (s. 63(1)(c), (d)). If you are on a long lay-off and then receive a package, count the weeks before you sign.

Job loss can also affect a family. A parent who pays child support and loses income may ask the court to vary a support order, but the court must first be satisfied that a change of circumstances under the guidelines has occurred (Divorce Act s. 17(4)). Our page on child support in Ontario explains how support is set.

What changes the answer?

Length of service. It sets the notice minimum (s. 57) and the severance threshold of five years (s. 64(1)).
The employer's payroll or a mass termination. These decide severance pay eligibility (s. 64).
A written contract. A greater contractual benefit applies instead of the ESA standard (s. 5(2)); a clause that limits you to the minimums may also matter, and is worth having reviewed.
Constructive dismissal. A significant change to a fundamental term without your consent, followed by resigning within a reasonable time, can count as a termination (ss. 56(1)(b), 63(1)(b); ontario.ca ESA guide).
Resigning after notice. An employee given notice can resign on two weeks' written notice and keep severance pay if the resignation takes effect during the statutory notice period (s. 63(1)(e); ontario.ca ESA guide).
Reasons connected to a protected right. If the termination followed a leave or a complaint, see reprisal under the ESA.
Prescribed employees. Some employees are excluded from notice or severance by regulation (ss. 55, 64(3)).

A worked example

For example, imagine an engineer in Markham who emigrated from Tehran and has worked for a large software company for six years and four months. She is called into a meeting and handed a letter: her job ends today, the company will pay six weeks' pay, and another ten weeks if she signs a full and final release within five days. This is a hypothetical walk-through of the rules, not a description of any real case or result.

Her ESA minimum notice is six weeks (s. 57(f)), with benefits continued for that period. If the company's payroll is $2.5 million or more, she also qualifies for severance pay of about 6.33 weeks' regular wages (six years plus four months divided by 12, s. 65(1)). The first six weeks therefore do not cover the severance pay; the ESA amounts are owed whether or not she signs (s. 5(1)). The extra ten weeks are what the company offers for the release. She asks for time to get advice, reads the release in full, and weighs it against a possible court claim for reasonable notice, which she must start within two years. If she files an ESA claim instead for termination and severance pay, she cannot also sue for wrongful dismissal over the same termination unless she withdraws the claim within two weeks (s. 97(2), (4)).

What mistakes do people make with a severance offer?

Signing in the meeting. Ask for the documents and time to review them.
Assuming the offer includes severance pay. Notice and severance are separate; check both.
Treating ESA amounts as negotiable. They cannot be waived (s. 5(1)).
Filing an ESA claim without thinking about a lawsuit. The two routes block each other (ss. 97, 98).
Missing the human rights deadline. It is one year, not two.
Not reading the release in full, or in translation. If English legal wording is hard to follow, get it explained before signing.

What to do this week

Keep the termination letter, the release and any emails about the offer.
Write down your start date, any earlier work for the same employer and your regular weekly wages.
Find your employment contract and any bonus, commission or stock plan documents.
Calculate your ESA notice using the table above, and check whether severance pay may apply.
Ask the employer in writing for more time if you need it.
Book a consultation; you can discuss your matter in English, Persian (Farsi) or French.

Frequently asked questions

Can my employer withhold my ESA pay unless I sign?

ESA standards cannot be contracted out of or waived, and a waiver is void (s. 5(1)). An offer that makes your minimum entitlements depend on signing is worth questioning before you sign.

Does severance pay depend on the reason I was let go?

Eligibility turns on length of service and the employer's payroll or a mass termination (s. 64(1)). The ESA guide explains the exceptions, including for certain prescribed employees.

Is working notice the same as termination pay?

Both satisfy the ESA notice rule. During working notice the employer cannot reduce your wage rate or change other terms, and must keep up benefits (s. 60).

What if I find a new job during the notice period?

Under the ESA, notice or termination pay is a minimum set by length of service. A court claim for reasonable notice works differently, so ask about the effect of a new job before you accept a settlement.

Can I take my case to Small Claims Court?

Small Claims Court hears claims up to $50,000 since October 1, 2025. Our Small Claims Court page explains it in general terms.

I am on a work permit. Do these rules apply to me?

Foreign nationals employed in Ontario also have ESA rights, and the province notes that the Employment Protection for Foreign Nationals Act adds protections for people working through immigration or temporary foreign worker programs. Immigration questions about your permit are separate and outside this guide.

Offered a severance package in Ontario? What to check before you sign