Termination Pay in Ontario: How It Differs From Severance Pay, and When It Actually Arrives

"Termination pay Ontario" usually stands in for four different questions at once: what the Employment Standards Act's section 57 notice-or-pay-in-lieu covers, what the separate section 63 to 65 severance pay covers, when that money actually has to land in your account, and how common-law notice fits on top of all of it.

Information last verified on 2026-08-16. This article has not yet been reviewed by a licensed lawyer.

Why This Search Term Means Four Different Things

Most people typing "termination pay Ontario" into a search bar are really asking one of four separate questions: how much notice or pay in lieu the Employment Standards Act (ESA) requires, whether a separate severance payment is also owed, when the money is actually supposed to show up, or how a lawyer's talk of "reasonable notice" fits into any of it. The Act genuinely separates the first two into different sections with different tests, which is where most of the confusion starts. This page sorts out which is which and where each one is decided, without re-deriving the full figures that other pages on this site already cover in depth.

1. ESA Termination Pay: Notice or Pay in Lieu (Section 57)

Section 57 of the ESA is what most people mean by "termination pay." It applies once you have been continuously employed for at least three months, and it gives your employer two options: give you working notice before your last day, pay you in lieu of that notice, or some combination of the two. The amount scales with your length of service, starting at one week and rising to a cap of eight weeks for employees with eight or more years of service. If you are given pay in lieu instead of working notice, it is based on your regular wages for a regular work week, plus vacation pay on that amount.

A narrow set of exemptions can eliminate this entitlement entirely, most notably wilful misconduct, disobedience, or wilful neglect of duty that is not trivial and was not condoned by the employer. A separate set of rules applies to mass terminations, where an employer ends the employment of 50 or more people at one location within four weeks: fixed notice tiers of eight, twelve, or sixteen weeks apply instead of the individual scale above, based on how many people are let go rather than any one person's service, and as of July 1, 2025 affected employees must also receive a copy of the ministry's Employment Ontario Career Supports information sheet on the first day of the notice period.

The full week-by-week notice table, the exemption details, and the mass-termination tiers are already built out at Ontario severance pay, which this page will not duplicate.

2. ESA Severance Pay: A Separate, Additional Entitlement (Sections 63 to 65)

This is the piece that causes the most confusion, and it is the core fact this page exists to fix: severance pay is not another name for termination pay. It is a separate entitlement with its own, stricter eligibility test.

Severance pay under sections 63 to 65 only applies if both of the following are true: you have five or more years of service with the employer, counting all periods whether continuous or not, and your employer's payroll is 2.5 million dollars or more across its whole business including related entities, or the employer severed 50 or more employees within six months because of a permanent closure. If either condition on the employer side is missing, no severance pay is owed under the ESA, no matter how long you worked there.

Where it is owed, the formula is one week of regular wages for each completed year of service, plus a proportional amount for each completed month, multiplied by your regular weekly wage, up to a cap of 26 weeks. Ontario's own guide illustrates this with a worked example: an employee earning 1,000 dollars a week with 7.75 years of service would be owed 7,750 dollars in severance pay.

Because the two entitlements have independent tests, a longer-service employee at a large employer can owe both at once, and when that happens they stack, up to a combined statutory ceiling of 34 weeks (8 plus 26). But most Ontario terminations only trigger termination pay, either because the employee has under five years of service or because the employer does not meet the payroll or closure threshold. The full formula, the worked math, and how the two entitlements stack are already covered at Ontario severance pay; this page's job is only to keep the two tests from being mistaken for each other.

3. When Your Final Pay Actually Arrives

This is the question the two pages above do not answer, and it is often the real question behind a "termination pay Ontario" search: not how much, but when.

Ontario's ESA sets one deadline for all outstanding wages once employment ends, whatever the reason. Your employer must pay your outstanding wages, including vacation pay, plus any termination pay or severance pay you are owed, no later than seven days after your employment ends, or on what would ordinarily have been your next regular pay day, whichever is later. This is confirmed on two separate Ontario government guide pages: the general rule for all outstanding wages whenever employment ends, and, separately, the same formula stated specifically for termination pay. Both describe the identical seven-day-or-next-payday deadline, and it applies whether you quit, were dismissed without cause, were dismissed for cause, or were laid off.

In practice, this means your outstanding regular wages, your accrued vacation pay, and any termination pay or severance pay owed to you are generally due together, on the same deadline, rather than arriving in separate instalments on separate schedules. Your employer must also give you a wage statement on or before the day your final wages are paid, showing the pay period, your wage rate, your gross wages and how they were calculated, any deductions, and your net wages.

What Can Be Deducted From Your Final Pay

Ontario's ESA limits what an employer can subtract from what you are owed to three categories: amounts required by law, such as income tax, Employment Insurance, and Canada Pension Plan contributions; a court order directing part of the payment to a third party through the court clerk; and a deduction you authorized in writing, which must be signed and must state the amount or a clear method for calculating it. Verbal or blanket authorization is not enough. Even with signed authorization, an employer generally cannot deduct for faulty work, such as a credit card error or damaged goods, or for a cash or property shortage unless you had sole access to it and gave written authorization for that specific deduction.

4. Common-Law Reasonable Notice: The Larger Entitlement Layered on Top

The ESA sets a statutory floor, not a ceiling. Most non-unionized Ontario employees without an enforceable contract clause limiting them to the ESA minimums are also entitled to common-law reasonable notice, which is decided case by case using factors courts have applied since Bardal v. Globe & Mail and is typically much larger than the ESA amounts described above. Rather than adding on top of termination and severance pay for the same dismissal, the ESA minimums are usually treated as a component of, or a floor under, a common-law notice settlement, not an extra amount stacked beside it.

This page will not re-explain how common-law notice is calculated. For the full Bardal factors, the rejection of any simple "one month per year" formula, and how a contract clause can validly cap an employee at the ESA floor, see reasonable notice under Canadian common law. For the broader question of whether a dismissal was lawful in the first place, see termination without cause in Canada.

If Your Final Pay Is Late

If your employer misses the seven-day-or-next-payday deadline, complaints go to Ontario's Ministry of Labour, Immigration, Training and Skills Development, either through its online claim portal or by mailing a form to the Provincial Claims Centre. The general limitation period is two years: a claim generally has to be filed within two years of the alleged ESA violation, and only wages owed within the two years before filing are recoverable. An Early Resolution Officer typically reviews the claim first, followed by an Employment Standards Officer if it is not resolved. The specific ESA section number behind this two-year window is commonly cited elsewhere as section 96(3), though that exact citation was not independently confirmed against the Act's own text for this article and should be treated as a starting point rather than a final answer.

Related Resources

For the full termination-pay and severance-pay tables and worked math referenced above, see Ontario severance pay. For how Ontario's payment-timing rule compares with the rest of Canada, see final paycheck laws in Canada. For statutory notice length across provinces, see notice periods in Canada. For whether a dismissal itself was lawful, see termination without cause in Canada and wrongful dismissal in Canada. For what qualifies as a forced resignation rather than a dismissal, see constructive dismissal in Canada. For the general employment-standards framework, see employment standards overview, severance pay in Canada, and at-will employment in Canada.

Disclaimer

This article is informational only and is not legal advice, and it does not promise that any specific amount is owed in your situation. Ontario's employment-standards complaint window is time-limited, generally two years from the alleged violation, so do not wait to get advice if you believe you were shorted on final pay. The exact ESA section number behind that two-year window is commonly cited as section 96(3) but was not independently confirmed against the Act's text for this article. Speak with a licensed employment lawyer or contact Ontario's Ministry of Labour, Immigration, Training and Skills Development directly to confirm current figures, deadlines, and your specific entitlements.