Each province and territory has its own legislation that lays out compensation rules for terminated employees.
The laws vary, but they all agree on two conditions: you have to have worked there for a minimum period of time — often three months — and lost the job through no fault of your own.
If you’re in a union, your collective agreement may spell out different severance guidelines, or there may be other provisions in your own contract.
Employees under federal jurisdiction also have different rules.
Under Canada’s Labour Code, you are entitled to two different types of compensation for termination: pay in lieu of notice; and severance pay. These two terms are sometimes used interchangeably.
Payment in lieu of notice means your employer didn’t give you the legally required written advance notice of your termination — usually two weeks — and instead just pays you the amount you would have earned in that same period.
Employers can also give you a combination of a written notice and payment in lieu. For example, if you’re entitled to four weeks’ notice, you can get written notice for two weeks and another two weeks’ salary.
Many employers under federal jurisdiction, such as Canada Post, chartered banks and the RCMP have termination and severance rules dictated by the Canada Labour Code.
Under the Code, you’re entitled to two weeks’ notice or two weeks’ salary after you’ve done the job for three consecutive months.
If you’ve had the job for at least 12 consecutive months, you’re legally entitled to two days’ regular wages for each year of completed employment, plus five days.
You must complete at least three consecutive months on the job to be entitled to notice or pay in lieu. After three months, you get one week’s notice. The amount of notice increases for years worked to a maximum eight weeks’ notice for 10-plus years of service.
Employers can also choose a combination of notice and pay.
You are eligible for a single week’s notice or pay once you’ve worked between three consecutive months and one year for that employer. You can get another week’s worth of salary for each year on the job to a maximum of eight weeks.
Workers are entitled to one week’s notice or pay after just 30 days on the job and that increases to a maximum of eight weeks’ worth for employees who have worked at least 10 years.
Employers can give you the required written notice or pay, or a combination.
If you’ve worked less than six months, you’re not entitled to any termination notice or pay. After six months, you can get two weeks’ worth. It remains at two weeks until you’ve completed five years on the job, when the notice period doubles to four weeks.
Newfoundland and Labrador:
Employees may get notice or pay in lieu. No additional severance is legally required.
You must work three months before you’re entitled to any notice or pay in lieu. Between three months and one year, you get one week’s worth. The maximum is six weeks’ notice after 15 years of employment.
Employees are entitled to notice or pay in lieu, but no additional severance.
You’re entitled to a single weeks’ notice or pay after working three months, but less than two years. Between two and five years, you get two weeks’ notice or pay to a maximum of four weeks for 10 years of service.
Employees in Ontario can be entitled to severance pay and notice/pay in lieu.
Severance pay takes longer to earn. You can get termination pay or notice if you’ve worked less than a year, but severance is due after five years.
Severance pay is due when:
- You’ve worked for the employer for five years or more AND
- Your employer has an Ontario payroll of more than $2.5 million OR
- Terminated 50 or more people within six months.
Employees who’ve worked less than one year get a week’s worth of notice or pay. The advance notice/pay period increases almost weekly for each year worked to a maximum of eight years.
Prince Edward Island:
If you’ve worked between six months and five years, you’re entitled to two weeks’ worth of notice or pay. After five years, that period doubles to four weeks.
After three months, you get one week’s notice or pay. Between one and five years, you get two weeks to a maximum of eight weeks’ notice for 10 years of employment.
Once you’ve completed three months on the job, you’re entitled to one week’s notice. Between one and three years, you get two weeks, to a maximum of eight weeks’ notice for 10 years or more.
After 90 days of employment, you can get two weeks’ notice or pay. After three years, you get an additional weeks’ worth for every year to a maximum of eight weeks.
Employers must give at least two weeks’ notice or pay if you’ve worked more than 90 days and more than 25 hours per week. The notice jumps to two weeks after three years on the job and then increases each year to a maximum of eight weeks for eight years.
You must complete at least six months on the job to get one week’s notice or pay. After a year, you can get two weeks’ notice and the amount increases again after three years to a limit of eight weeks’ notice for eight or more years of work.