Ontario Termination and Severance Pay Guide 2026
Understand Ontario ESA termination notice, pay in lieu and the separate severance-pay test, including the five-year threshold, employer-size test and 26-week cap.
Check your figures
Start by separating two ESA entitlements
Ontario uses “termination pay” and “severance pay” for different minimum standards. Termination notice gives an employee warning that employment will end; an employer can provide working notice, pay in lieu, or a combination. ESA severance pay compensates certain longer-service employees when employment is severed and has a separate eligibility test.
An employee can qualify for both. Do not let an offer label one payment as covering the other without an itemised calculation. The Ontario Ministry of Labour expressly describes severance as different from termination pay.
Ontario ESA individual termination-notice schedule
For an individual termination, the statutory minimum generally begins after three months of continuous employment. The following Ontario ESA schedule was checked on 18 July 2026:
| Continuous employment | Minimum notice |
|---|---|
| Less than 3 months | No ESA individual notice |
| 3 months to less than 1 year | 1 week |
| 1 year to less than 3 years | 2 weeks |
| 3 years to less than 4 years | 3 weeks |
| 4 years to less than 5 years | 4 weeks |
| 5 years to less than 6 years | 5 weeks |
| 6 years to less than 7 years | 6 weeks |
| 7 years to less than 8 years | 7 weeks |
| 8 years or more | 8 weeks |
Exemptions can apply, including specified misconduct and occupational exceptions. Mass terminations can trigger different notice requirements based on the number of employees affected, so the individual table is not the right tool for every group termination.
The separate ESA severance-pay test
An employee generally qualifies for Ontario ESA severance only if both conditions are met:
- the employee has worked for the employer for five years or more; and
- the employer has a global payroll of at least $2.5 million, or severed 50 or more employees in six months because all or part of the business permanently closed.
These thresholds were checked against the Ontario guide on 18 July 2026. Failing the ESA severance test does not erase termination notice/pay or any greater right under a contract or common law.
How Ontario ESA severance is calculated
Multiply regular wages for a regular work week by completed years of employment, then add completed months in the incomplete year divided by 12. The ESA maximum is 26 weeks of regular wages. A special calculation applies where the employee does not have a regular work week or is paid on another basis.
ESA minimums are not a common-law estimate
Ontario's ESA establishes minimum rights. A valid employment contract may limit an employee to compliant minimums, while an unenforceable or silent termination clause can leave room for greater contractual or common-law notice. Common-law assessment can involve the role, age, service, compensation, availability of similar work, contract wording and other facts.
Do not multiply years of service by a fixed “one month per year” rule. That is not the ESA schedule and is not a reliable common-law formula. Obtain Ontario legal advice before signing a release where the difference could be significant.
Documents to check before accepting payment
- the employment contract and every later amendment;
- the written termination letter and effective date;
- working-notice and pay-in-lieu calculations;
- the employer's global payroll or closure facts if ESA severance is disputed;
- regular weekly wages and completed months used in the severance formula;
- vacation pay, commissions, benefits continuation and other final amounts; and
- the wording and deadline of any release.
Related explanations
Frequently asked questions
Are termination pay and severance pay the same in Ontario?
No. Termination notice or pay in lieu applies to many employees after three months of continuous employment. ESA severance pay is a separate benefit for qualifying employees who meet the five-year service test and the employer payroll or mass-closure test.
How much statutory termination notice can Ontario require?
For an individual termination under the ESA, the minimum generally rises with continuous service from one week after three months to a maximum of eight weeks after eight or more years. Exemptions and separate mass-termination rules can apply.
Who qualifies for Ontario ESA severance pay?
The employee generally needs five or more years of employment and the employer must have a global payroll of at least $2.5 million, or have severed 50 or more employees in a six-month period because all or part of the business permanently closed.
What is the Ontario severance-pay maximum?
The ESA maximum is 26 weeks of regular wages for a regular work week. The formula generally uses completed years plus completed months divided by 12.
Can common-law notice be more than the ESA minimum?
Yes. The ESA sets minimum standards. Depending on the employment contract and facts, an employee may have greater contractual or common-law rights. Courts consider factors beyond service alone, so an ESA calculator should not be treated as a common-law estimate.
Does this guide apply across Canada?
No. It covers Ontario's Employment Standards Act baseline. Other provinces and federally regulated workplaces use different statutes, eligibility tests, notice schedules and complaint routes.
Official sources
Checked 18 July 2026. Statutory figures and eligibility statements above should be read with the effective dates shown in the text.
- Ontario — Termination of employmentESA individual and mass-termination rules, notice and termination pay. Checked 18 July 2026.
- Ontario — Severance payFive-year test, $2.5 million payroll / 50-employee closure test, formula and 26-week maximum. Checked 18 July 2026.
- Ontario Employment Standards Act, 2000Primary provincial legislation; Part XV covers termination and severance. Checked 18 July 2026.