Not Everyone is Entitled to Severance: Know Your Rights and Obligations

Pursuant to the Employment Standards Act, employers are required to provide severance pay, which is compensation to a qualified employee who has his or her employment "severed". The purpose of severance pay is to compensate an employee for loss of seniority and job-related benefits.

In order to qualify for severance pay, an employee must be employed by the employer for five years or more. Additionally, the employer must have severed the employment of 50 or more employees in a sixmonth period because all or part of the business closed OR the employer must have a payroll in Ontario of $2.5 million or more. Severance pay is in addition to any other amount to which an employee is entitled under the Employment Standards Act or his or her own employment contract.