(416) 214-5111
Sultan Lawyers
Book Now
(416) 214-5111

Why You Need a Severance Package Lawyer in Toronto

Termination is an unfortunate aspect of business for every employer. Employers have a legal responsibility to ensure that they provide employees with adequate notice, and appropriate remuneration in most circumstances. The laws around severance and termination can be complex, as they are dictated both by employment legislation as well as the common law. Seeking advice from an experienced severance package lawyer Toronto is key to ensuring that an employer has met their obligations and minimized any risk with respect to claims for wrongful dismissal.

The severance package lawyer at Sultan Lawyers work regularly with employers to provide guidance with respect to severance packages and employee terminations. We will review all of the relevant factors with an employer and assist with designing an individualized package that addresses all legal obligations including legal notice requirements and compensation.

What is severance pay?

Severance pay is remuneration paid to a qualified employee whose employment has been “severed” in order to compensate the employee for their losses, including seniority.

Is severance pay the same as termination pay?

No. Termination pay refers to the statutory minimum notice period under the Employment Standards Act. This compensation is paid upon dismissal in lieu of notice to any employee who was employed for at least three months. Termination pay is equivalent to one week’s pay per year of service. Certain exceptions apply, such as an employee who is terminated for cause.

Severance pay is paid over and above the termination pay amount. For qualifying employees, it is equivalent to an additional week of pay per year of service, prorated for any partial year of employment. Severance pay is capped at 26 weeks.

It is important to note that termination pay, and severance pay will be applied in the following circumstances:

Who qualifies for severance pay?

Not every employee requires severance pay upon termination. Severance pay is aimed at long-term employees, and will only be enforced in the following circumstances:

  1. The employee has worked with the employer for at least 5 years; and
  2. The employer:
    1. has a payroll in Ontario worth at least $2.5 million; or
    2. severed the employment of 50 or more employees in a six-month period because all or part of the business closed permanently.

Our Severance Package Services in Toronto

Upon termination, the employee will be provided with the severance or termination package and granted a period of time to review and accept the offer. The package will outline the compensation being offered for both termination and severance pay, the continuation of benefits throughout the notice period, and will contain a letter of acceptance for the employee to sign. The letter serves to provide the employee with a full picture of their compensation as well as act as a release, absolving the employer from responsibility for any future claim for wrongful dismissal.

Why Choose Sultan Lawyers as Your Severance Package Lawyer in Toronto

 Sultan Lawyers  a premier legal practice of employee relations, including workplace immigration law, skilled and  legal professionals well-thought-out legal counsel and advocacy to your . They have an exceptional dedication to upholding your rights and guaranteeing equitable treatment at work. Sultan Lawyer’s expert team of employment lawyer Toronto is the most effective choice for people and companies looking for dependable, efficient legal solutions in employment law because of their broad experience, client-focused philosophy, and track record of successfully managing complicated employment and immigration situations.

Contact Our Severance Package Lawyers in Toronto Today

Sultan Lawyers regularly works with employees in order to review severance packages, and with employers on the design of these packages. Our team of severance package lawyer Toronto will provide guidance to ensure that the employer has met all legal obligations to their employee while protecting themselves from the risk of litigation. Let us review your termination strategy and current severance package offerings in order to ensure that you are meeting all legal requirements. Contact us online or at 416-214-5111 for a consultation.

Frequently Asked Questions

What is severance pay, and who is entitled to it?

Severance pay is an entitlement under the Employment Standards Act (“ESA”) that is paid out over and above termination pay. Severance pay is reserved for specific situations, such as long-term employees of companies of a certain size. Specifically, employees are entitled to severance pay in the following circumstances:

  • The employee has at least 5 years of service with the employer; and
  • The employer has a payroll of at least $2.5 million.

OR

  • The employee is one of 50 or more employees whose employment was terminated within a 6-month period.

There are also certain exemptions from the entitlement to severance pay, including situations where the employee:

  • refused an offer of “reasonable alternative employment” with the employer;
  • had their employment severed because of a permanent closure of all or part of the employer’s business that the employer can show was caused by the economic effects of a strike;
  • was employed in construction or in the on-site maintenance of buildings, structures, roads, sewers, pipelines, mains, tunnels or other works; and
  • was guilty of wilful misconduct, disobedience or wilful neglect of duty that was not trivial and was not condoned by the employer.

Severance pay is calculated as follows: Multiply the employee’s regular wages for a workweek by the sum of:

  • the number of completed years of employment; and
  • the number of completed months of employment divided by 12 for a year that is not completed.

It should be noted that the term “severance package” is commonly used as a way of referring to any termination package an employee may receive at the end of their employment. This is not the same as the severance pay referenced above.

Do you get a severance package if you get fired?

In general, employees who have been dismissed for cause are not entitled to severance pay. However, if fired without cause, they can be entitled to severance pay based on their employment contract and any applicable legislation.

How do you calculate a severance package?

Typically, a severance package consists of extended benefits, income based on years of service, and unused vacation time. Considerations for the calculation include position, age, tenure, and corporate policy. The package is designed to help workers adjust to life after losing their jobs.

Is a severance package taxable?

Severance pay received in Canada, when it is part of a specialized package, is also subject to income taxes. If you receive a salary, included in your T4 slip. This severance payout forms part of your taxable income for the year, which might  different tax bracket and   tax you pay.

How much is severance pay in Canada?

Severance pay in Canada varies by province and agreement. one to two weeks’ salary for every year of employment, although there may be  variations. The terms are determined by  and provincial regulations.

Am I eligible for EI if I get severance?

Severance may delay your benefits but does not automatically disqualify you from EI. Receivables are seen as wages, which could postpone your eligibility for unemployment benefits. You  still be if you meet the other requirements, such as having enough insurable hours and a valid reason for job separation.

Can my employer change the terms of my severance package?

Yes, but only under certain conditions. If you haven’t yet accepted or signed the severance offer, the employer may alter the terms. Consulting an employment lawyer helps ensure any changes meet legal requirements and respect your rights.

What are the common components of a severance package?

A severance package typically includes termination pay, extended benefits, outplacement assistance, accrued vacation pay, and sometimes a confidentiality clause. Additional components, like performance bonuses or prorated commissions, may apply. Reviewing your package with a lawyer can clarify its full scope.

How does the Ontario Employment Standards Act (ESA) affect my severance package?

The ESA sets minimum requirements for severance and termination pay, based on employment length and company size. It ensures eligible employees receive fair compensation, but you may be entitled to more than the minimum. Legal advice helps maximize your entitlements.

Can a lawyer help me increase the compensation in my severance package?

Yes, a lawyer can often negotiate improved terms, especially if the package doesn’t reflect your role or industry standards. Experienced employment lawyers assess your unique situation to help secure a more favourable severance arrangement, potentially increasing your compensation.

What is the difference between severance pay and termination pay?

Termination pay and severance pay are both forms of compensation provided when employment ends in Ontario, but they serve different purposes and have different eligibility rules.

Termination pay is broader and more commonly applicable. It is paid when an employee is dismissed without sufficient notice. Its purpose is to compensate for the lack of working notice and help support the employee during the transition to new employment. It can include multiple forms of compensation, such as statutory minimums under the Employment Standards Act (ESA) and, in some cases, additional amounts based on common law. Generally, termination pay is calculated based on the employee’s length of service, often tied to a set amount per year worked.

Severance pay, on the other hand, is a specific type of compensation under Ontario’s ESA and applies only in certain situations. To qualify, employees must typically have at least five years of service, and the employer must have a payroll of $2.5 million or more (or meet other qualifying conditions, such as a mass termination). Severance pay is calculated as one week of wages per year of service, up to a maximum of 26 weeks. Its purpose is to recognize long-term service and compensate employees for losses tied to factors like seniority and reduced re-employment prospects.

The key differences come down to:

  • Purpose: Termination pay replaces notice, while severance pay recognizes long-term service
  • Eligibility: Termination pay applies to most employees; severance pay has stricter requirements
  • Scope: Termination pay is broader and may include multiple forms of compensation; severance pay is a specific statutory entitlement

In some cases, employees may be entitled to both termination pay and severance pay, depending on their situation.

Because entitlements can vary based on contracts, circumstances of termination, and common law considerations, it’s important to seek professional legal advice to fully understand your rights and obligations.

What is the difference between “notice” and “severance” under the ESA, 2000?

Generally, when an employer ends an employment relationship, the employee must be provided with written notice of the termination of their employment, payment in lieu of notice, or some combination of both. Generally, employees will qualify for termination pay unless it can be demonstrated that they have been terminated for cause, meaning that they have engaged in wilful misconduct, wilful disobedience or wilful negligence.

Severance pay, in comparison, is provided in much more limited circumstances to terminated employees and is not the same as written notice or pay in lieu. For example, severance pay is generally only provided to employees with five (5) years or more of service (whether continuous or not) where the employer has an annual payroll in Ontario equivalent to at least $2.5 million or where the employment of 50 or more employees has been severed in the previous six (6) months.


Book Now

Client Testimonials

“I want to sincerely thank Sharaf Sultan and his team for their assistance. Right from the beginning, I knew they were extremely knowledgeable and hard working. I also had confidence that Sharaf and his team understood my perspective and that they were prepared to work hard to receive the best result possible. Sharaf and his team were always professional and diligent when providing legal services. He truly went above and beyond my expectations. The whole team provided honest and precise services and they managed to solve any problems that arose during my case. I would definitely work with them again!!”

C. Bell

“Kristine Gorman of Sultan Lawyers was terrific in helping me get a Canadian work visa. Responsive, friendly, but mostly incredibly thorough and efficient, she was a life line for when I needed wise counsel and focused expertise.”

D. Baum, Ph.D., D.Min. Management Consultant

“Sultan Lawyers provided a great experience during a difficult time with my employer. Kristine was extremely thorough and knowledgeable when reviewing and articulating the risks and details of my severance package. I am thankful for Kristine as her expertise enabled and empowered me to confidently make a decision on my options.”

James V.

“I wholeheartedly endorse Sharaf and Alexandra for their employment expertise and their impressive level of client service. Not only was their legal counsel top-notch, but Sharaf helped me navigate the tricky emotional waters related to my matter in a healthy way. He saw the big picture and helped me toward the best possible outcome for me now and into the future. As a lawyer myself, I realised that the smartest thing I could do in my circumstances was to have excellent legal advice, and Sharaf and Alexandra went above my expectations. It was empowering to work with them, and I can't thank Sultan Lawyers enough!”

N. Haras

I had an incredible experience working with the Sultan Lawyers team from start to finish. They were friendly and professional, and made me feel at ease with what I was going through. They provided me with some incredible advice, which resulted in a better outcome than I had expected. They also followed up with me to make sure everything was ok, which was a lovely touch, they really care about their clients. I also felt like the service  I received was incredibly affordable, and I would definitely recommend Sultan Lawyers to anyone, without hesitation.

A. Kelly

I had the pleasure of getting advice from Ani to resolve my concerns about an employer enforcing an unreasonably long resignation notice, which could have prevented me from taking another opportunity to grow my professional experience and achieve my goals. Ani was incredibly knowledgeable and helpful throughout the entire process. Her positive attitude and expertise gave me peace of mind, and I couldn't have asked for a better advocate. Highly recommend!

J. Núñez
Sultan Lawyers April 30, 2026

Can I Free Myself From Restrictions Under My Employment Contract?

There are legal ways to get out of an employment contract. The more important issue is how you leave and what that decision means for your rights and obligations. In…

Sultan Lawyers April 17, 2026

How Long Do Wrongful Dismissal Cases Take?

Most wrongful dismissal cases in Ontario resolve within three to twelve months. Some settle in a matter of weeks, particularly when both sides want to avoid the cost and uncertainty…

Sultan Lawyers April 10, 2026

Severance Pay vs Pay in Lieu of Notice: What’s the Difference?

When you are dismissed from work, your employer may hand you a letter that references severance pay, termination pay, and pay in lieu of notice, also referred to as wages…

© Sultan Lawyers. All rights reserved. Privacy Policy / Disclaimer