How to use the severance pay calculator
- 1 Enter your years of employment.
- 2 Enter your regular weekly wages.
- 3 Choose whether the employer's payroll is $2.5 million or more.
- 4 Read the minimum termination and severance pay.
Worked example
8 years of service at $1,500 a week with a payroll over $2.5 million. Termination pay is 8 weeks ($12,000) and severance pay is 8 weeks ($12,000), so the minimum total is $24,000. Any unused vacation pay and outstanding wages must also be paid on top of this amount, usually within seven days.
ESA minimums and what else you may be owed
- Severance eligibility: you need five or more years of service, and your employer must have a payroll of $2.5 million or more, or be ending the jobs of 50 or more people in six months because of a closure.
- Minimums only: the ESA sets the floor. Your contract or common law may give much more "reasonable notice", especially for long service.
- Get advice before signing a release; a lawyer can tell you whether an offer is fair.
- Tax: severance is taxable; transferring part to an RRSP can defer tax if you have room.
Apply for EI benefits quickly after your job ends, and include unpaid vacation pay with the Vacation Pay Calculator.
Features
Termination pay
One to eight weeks of pay, based on length of service.
Severance pay
One week per year of service, up to 26 weeks, for eligible employees.
Combined minimum
Total of both entitlements.
When to use it
Layoffs
Check an offer meets the legal minimum. Apply quickly; see the EI Benefits Calculator.
Negotiation
Know the floor before negotiating. Add owed vacation with the Vacation Pay Calculator.
Employers
Budget for terminations. Shelter it with the RRSP Calculator.
Planning
Plan finances after a job ends. Plan your budget with the Take-Home Pay Calculator.
Related Pay and Salary tasks
Frequently asked questions
What is termination pay?
Pay instead of written notice: 1 week after 3 months, 2 weeks after 1 year, then 1 week per year of service up to 8 weeks after 8 years.
Who gets severance pay?
Employees with 5 or more years of service whose employer has a payroll of $2.5 million or more, or who are part of a mass termination of 50 or more people in six months.
How much is severance?
One week of regular wages per year of service, with partial years counted proportionally, up to 26 weeks.
Is this all I am owed?
It is the legal minimum. Courts often award more under common law reasonable notice, unless your contract limits it.
Is severance taxed?
Yes, as a retiring allowance. Transferring part to an RRSP may be possible only for older service.
Does this apply outside Ontario?
No. Each province has its own rules.
What counts as regular wages?
Pay for regular hours, not including overtime. For workers with irregular hours, the average weekly wage over the last 12 weeks is used.
Can I get working notice instead of pay?
Yes. Your employer can give written notice of the same length instead of termination pay, but you must be kept on regular pay during the notice period.
Is severance pay paid in a lump sum?
Usually, within seven days or by the next regular payday. It can sometimes be paid in instalments with your agreement.
Who is not entitled?
Employees fired for wilful misconduct, those on certain construction sites, and employees who refuse reasonable alternative work may not be entitled.
Should I sign a release?
Get legal advice before signing, because a release usually gives up your right to claim more than what is offered.
Does severance count for EI?
Severance and termination pay are allocated to the weeks after your job ends, which can delay EI but does not reduce the total EI you can receive.
Results are estimates based on the official rates linked above. Confirm important figures with the issuing authority or a qualified adviser before you act on them.
Built and reviewed by Hamza Farooq, founder and lead developer
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