Severance

An employer can sever an employee's employment by:

• dismissing them,

• laying them off for 35 weeks or more, or

• if they are unable to continue employing them.

• If an employee resigns because of constructive dismissal, it also counts as a severance.

If an employee is laid off and makes less than 25% of their normal work week in a week that's not excluded, their employment is considered severed.

If an employer terminates an employee without notice, the amount of severance pay they receive is calculated as if they were still employed during the notice period they should have been given. The day of severance is deemed to be the day the employer's notice of termination would have taken effect if the employee hadn't resigned.

Severance Pay

Severance pay is calculated by multiplying the employee's regular wages for a regular work week by the number of years and months they've worked for the employer.

• The amount of severance pay cannot exceed 26 weeks of the employee's regular wages for a regular work week.

• Only certain deductions can be made from severance pay, such as supplementary unemployment benefits, and severance pay that was previously paid to the employee.

• Severance pay can be paid in instalments over a period of up to three years with the agreement of the employee or approval of the director.

  • If an instalment payment is missed, all remaining severance pay becomes payable immediately.

Ont ESA XV s.63, 65