How Do You Calculate Severance Pay Ontario?
Losing a job can be one of the most traumatic events in a person’s career. Whether it was a planned departure or the result of an unexpected layoff, the experience is often harrowing and leaves employees wondering what to do next. Fortunately, the Employment Standards Act, 2000 (ESA) offers some protections for terminated workers in the form of severance pay. However, many workers are confused about what exactly severance pay is and how it’s calculated.

Severance pay is compensation an employer must provide to an eligible employee upon their termination from a covered position in Ontario, regardless of what may be stipulated in the employee’s contract. It is distinct from, and in addition to, the notice or pay in lieu of notice an employer must give a terminated worker as per the ESA. The minimum statutory severance pay an employer must give is one week of regular wages for each completed year of service, up to a maximum of 26 weeks.

The ESA stipulates a minimum level of **[severance pay Ontario](https://www.htwlaw.ca/severance-pay)** but common law considerations can lead to higher levels than the legal standard set out by the legislation. Some of the most significant factors determining the amount an employee is entitled to receive include the length of employment, age, and whether any bonus payments have been earned.

In a recent episode of the Employment Law Show, Employment Lawyer Lior Samfiru provides some clarity about how to calculate severance pay ontario. He explains that severance pay is generally paid in addition to termination pay and, depending on the circumstances of a termination, it can also cover other costs incurred by a former employee, such as moving expenses or the cost of obtaining new employment.

A number of other important issues should be considered when calculating severance pay, including the length of an employee’s employment and any accumulated vacation days or personal holidays they may have. Additionally, if the individual has any contractual obligations to continue certain payments after their termination, such as group health insurance, the amount of any outstanding installments must be taken into account.

It is worth noting that, in addition to the ESA, there are specific federal laws that govern the amount of severance pay an employer must provide for terminated workers in Canada. For example, if an employee works in a federally regulated industry such as banks, airlines or telecommunications companies, they are subject to additional rules outlined in the Canada Labour Code.

When an employee is terminated, it’s always a good idea to seek professional advice from an experienced employment lawyer. An employment lawyer can review the terms of an employee’s contract, identify any potential severance pay owing and ensure the proper process is followed. In the event of a wrongful dismissal, a lawyer can help to ensure an appropriate amount of compensation is received. Obtaining a severance package is a crucial step for many individuals in establishing a financial safety net as they transition into the next phase of their career.