Nov 2025: Get the Scoop on Severance Pay!

Understanding Severance Pay  - No, There’s No “2-Week Rule”

There’s a lot of confusion and HR misconceptions out there around severance pay.

In Ontario, severance pay is compensation for employees who lose their job through no fault of their own. It’s a way to recognize long service and help them transition financially – basically it’s a thank you for your time with the company.

Here’s what you need to know:

✅ Who qualifies:

• Employees who’ve worked 5+ years with the company, and

• The employer has a payroll of $2.5M+ in Ontario or has permanently laid off 50+ employees within six months.

✅ How to calculate it:Regular weekly wages × (years of service + pro-rated months)

Example: $2,000/week × 10 years = $20,000

As for the “2-week rule”:

There isn’t one. Severance isn’t capped at two weeks - it depends on service and payroll size.

Termination pay vs. severance pay:

Termination pay covers the notice period. The notice period will depend on years of service and will range from 1 week to 8 weeks’ notice.

Severance pay recognizes long service. Generally, severance is paid at 1 week per year of service. Keep in mind that other factors may apply. Sometimes, both termination AND severance pay apply.

Other things to consider:

·      The level of responsibility of the role and how difficult it will be for the employee to find similar work.

·      Age and years of experience in the workforce.

·      Total compensation package: benefits, commissions, bonus, car allowance & expenses, pension contributions, etc.

Bottom line: Knowing the difference keeps you compliant and helps ensure a fair, professional offboarding process. I always say: treat people with respect and do the right thing.

If you’re reviewing termination or severance scenarios and want to make sure you’re following the right steps, I can help you sort through the details.