Quick Answer: What You May Be Owed at a Glance
⚡ Quick Answer — Key Facts
- In Ontario, most non-unionized employees terminated without cause are entitled to two separate pools of compensation: statutory minimums under the Employment Standards Act, 2000 (ESA) — up to eight weeks of termination pay plus up to 26 weeks of severance pay — and, separately, common law reasonable notice, which courts calculate using the Bardal factors and which can reach up to 24 months of total compensation for long-serving or senior employees.
- The ESA sets a floor, not a ceiling: common law severance is almost always significantly higher, and employees who accept only the ESA minimum may be giving up tens of thousands of dollars they are legally owed.
- Many employment contracts contain termination clauses that attempt to cap severance at ESA minimums — but Ontario courts have repeatedly struck down clauses using “at any time” language as unenforceable under the ESA (see: Waksdale v. Swegon North America, 2020 ONCA 391; Dufault v. Township of Ignace, 2024 ONCA 915; Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952). If your clause is unenforceable, you may be entitled to full common law severance regardless of what your contract says.
- A rough guideline — not a legal formula — is approximately one month of notice per year of service under common law, modified significantly upward for older employees, specialized roles, and difficult job markets.
- Employees should not sign a severance release until a lawyer has reviewed the offer, because signing a release permanently waives the right to seek additional compensation.
The message may have come in a formal letter slid across a boardroom table, or a short email from HR, or a meeting that started with “we need to talk.” However it arrived, the situation is the same: your employment is being terminated, and a severance offer is attached. Sign and return within five business days.
That moment — the sudden shift from employee to former employee — brings real financial anxiety and a flood of questions. Was this legal? Is this amount fair? Do I have to sign?
The answer to that last question is almost always: not yet. The severance offer on the table is frequently not the full amount Ontario law may allow you to claim. The gap between what employers initially offer and what the law actually requires can be substantial — sometimes representing months of additional income. Before you sign anything, here is what Ontario employment law actually says.
Know Where You Stand: Which Situation Applies to You?
Most terminations fall into one of three categories. Identifying yours is the first step to understanding your rights.
Path A
Terminated Without Cause
Your employer ended your employment without alleging misconduct. This is the most common scenario in Ontario and carries the strongest severance entitlements under both the ESA and common law.
Path B
Terminated for Cause
Your employer claims the dismissal was justified by serious misconduct. Ontario courts set an extremely high bar for cause — poor performance or a single incident rarely qualifies. If cause fails, the dismissal may be reclassified as wrongful.
Path C
You resigned, but only because your employer made a fundamental unilateral change to your role — a major pay cut, demotion, hostile environment, or ultimatum to “quit or be fired.” Ontario law may treat this as a termination, entitling you to the same compensation as if you had been fired without cause.
ESA Minimums vs. Common Law Severance: Two Very Different Numbers
Ontario’s Employment Standards Act, 2000 is the foundational workplace statute that sets the minimum standard every employer in the province must meet. But the ESA is a floor, not a ceiling.
Termination pay applies to most employees who have worked at least three months. The formula is one week of regular wages per completed year of service, to a maximum of eight weeks.
Severance pay is a separate, additional entitlement. It applies only if the employee has worked five or more years AND the employer’s Ontario payroll is at least $2.5 million (or 50 or more employees were severed in a six-month period). The maximum under the ESA is 26 weeks.
An employee with ten years of service could receive ten weeks of termination pay and ten weeks of severance pay — roughly five months total. Yet a court applying common law reasonable notice to the same employee, depending on circumstances, might award anywhere from twelve to eighteen months. That is the gap that matters.
There is one critical rule: if you are terminated, you must choose a single legal pathway. You may file a complaint with the Ontario Ministry of Labour under the ESA, or pursue a wrongful dismissal claim in court under common law. Ontario law does not permit both for the same termination. An experienced employment disputes lawyer can help you assess which route may produce the stronger outcome.
Note: Employees in federally regulated industries — banks, airlines, telecommunications, and interprovincial transportation — are covered by the Canada Labour Code, not the ESA. If you work in one of these sectors, separate rules apply.
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ESA Minimums vs. Common Law Severance by Years of Service
How the gap between Ontario’s statutory floor and court-awarded compensation grows over time
Nihang Law Professional Corporation · Law Society of Ontario · For informational purposes only. This chart does not constitute legal advice.
How Ontario Courts Calculate Your Severance: The Bardal Factors
The Bardal factors are not a rigid formula. There is no calculator that produces a guaranteed number. But they provide a structured framework for understanding why some employees receive significantly more severance than others.
Age of the employee. An employee who is 55 years old and loses a senior role may face a more constrained job market than a colleague who is 32. Courts recognise this reality: older employees with fewer comparable opportunities often receive longer notice periods.
Length of service. The longer you have worked for an employer, the longer courts generally consider it reasonable to need before finding a comparable position. An employee with fifteen years at the same company may receive a substantially longer notice period than someone who has been there two years.
Character of the position. Senior, specialized, and managerial roles typically attract longer notice periods than entry-level positions, because equivalent roles are harder to locate.
Availability of similar employment. If your industry is contracting, your specialisation is rare, or the GTA job market in your field is competitive, courts may extend the notice period further to reflect how long re-employment may realistically take.
As a commonly referenced guideline — not a legal rule — courts have historically awarded approximately one month of reasonable notice per year of service. But the Bardal factors can significantly modify this. A 47-year-old marketing director with twelve years of experience in a competitive GTA market may see an award of fourteen to twenty months depending on their full circumstances.
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Bardal Factors — How Each One Can Increase Your Severance
Four factors Ontario courts weigh to calculate common law reasonable notice — and what drives them higher
| Factor | Lower Impact | Moderate Impact | Higher Impact |
|---|---|---|---|
|
Age of Employee
Older workers often face fewer comparable opportunities |
Under 40 | 40 – 55 | 55+ |
|
Length of Service
Longer tenure means a longer reasonable notice period |
Under 3 years | 3 – 10 years | 10+ years |
|
Character of Position
Senior and specialized roles are harder to replace |
Entry-level | Professional / Managerial | Senior Executive |
|
Availability of Similar Employment
A tighter market means re-employment takes longer |
Abundant | Competitive | Scarce / Niche |
Nihang Law Professional Corporation · Law Society of Ontario · For informational purposes only. This chart does not constitute legal advice.
Why Your Employment Contract May Not Limit Your Severance
Many employees read the termination clause in their employment contract — the section stating the company can end employment “at any time” and will pay only ESA minimums — and accept that as the final answer. Ontario courts, with increasing consistency, are saying otherwise.
The turning point was Waksdale v. Swegon North America Inc., 2020 ONCA 391. The Ontario Court of Appeal established a principle that has reshaped employment law across the province: if the “for cause” portion of a termination clause violates the ESA — for example, by setting a lower misconduct threshold than the ESA’s “wilful misconduct” standard — the entire termination clause becomes unenforceable, including the “without cause” severance cap.
Courts have applied and extended this principle in the years since. In Dufault v. The Corporation of the Township of Ignace, 2024 ONCA 915 (SCC leave refused 2025), the Court of Appeal found that language permitting dismissal “at any time” and “in its sole discretion” was too broad. In Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952, the same reasoning was applied and reinforced.
The practical consequence is significant: if your employment contract contains language that mirrors what courts have struck down, the severance cap in that contract may be legally void — meaning you may be entitled to full common law reasonable notice regardless of what the contract says. The safest step before signing any severance offer is to have your employment contract reviewed by a lawyer who can assess whether the termination clause holds up against current Ontario case law.
Note: In 2026, the Ontario Court of Appeal is expected to issue further guidance in the Li and Jones appeals. This area of law continues to evolve.
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Ontario Termination Clause Case Law: 2020–2026
How Ontario courts have progressively narrowed employer reliance on ESA-capped termination clauses
Waksdale v. Swegon North America Inc.
2020 ONCA 391 — Ontario Court of Appeal
The foundational ruling: if the “for cause” clause in an employment contract violates the ESA’s wilful misconduct standard, the entire termination clause — including the “without cause” severance cap — becomes unenforceable.
Dufault v. Township of Ignace
2024 ONSC 1029 — Ontario Superior Court
The Superior Court finds that “at any time” and “in its sole discretion” language is unenforceable — the ESA prohibits dismissal in certain circumstances (e.g., post-leave, ESA reprisal). Full unpaid salary under the fixed-term contract is awarded.
Dufault Appeal Upheld — SCC Leave Refused (2025)
2024 ONCA 915 — Ontario Court of Appeal
The ONCA upholds the Superior Court’s ruling and reaffirms Waksdale. The Supreme Court of Canada refused leave to appeal in 2025 (2025 CanLII 51603), locking the principle in at the appellate level.
Baker v. Van Dolder’s Home Team Inc.
2025 ONSC 952 — Ontario Superior Court
Applies and reinforces the Waksdale/Dufault principles. Termination clauses permitting dismissal “at any time” continue to be struck down — a pattern now firmly established across Ontario trial courts.
Li & Jones Appeals — ONCA Pending
Ontario Court of Appeal — Decision Expected
Two cases raising questions about the precise scope of the Dufault principle are expected before the Ontario Court of Appeal in 2026. The ONCA’s guidance may clarify which specific contractual formulations remain enforceable.
Nihang Law Professional Corporation · Law Society of Ontario · For informational purposes only. This timeline does not constitute legal advice.
A Special Note for Newcomers and Work Permit Holders
Ontario’s Employment Standards Act, 2000 applies based on where you work — not your citizenship or immigration status. Newcomers, permanent residents, and temporary foreign workers all hold the same legal rights to termination pay, severance pay, and wrongful dismissal remedies as any other Ontario employee.
Open Work Permit Holders (PGWP, Spousal OWP)
If you hold an open work permit — such as a Post-Graduation Work Permit (PGWP) or a spousal open work permit — your authorization is not tied to a specific employer. You may continue working for another employer in Canada while your permit remains valid. Your employment law rights are identical to those of any other Ontario worker.
Employer-Specific Work Permit Holders
If you hold an employer-specific work permit, your authorization is tied to your current employer. Termination may mean your permit no longer authorizes you to work for anyone else. Applying for a change of employer or a new permit may be time-sensitive and should happen in parallel with, not instead of, your employment law claim.
Permanent Residents and Newcomer Citizens
You have the full benefit of Ontario employment law. Language barriers, unfamiliarity with the system, or uncertainty about Canadian workplace norms should not prevent you from asserting the legal entitlements that the law provides.
The intersection of employment and immigration law is one of the most complex situations an Ontario worker can face — and it is one of the few situations where having both practice areas under one roof genuinely matters. Qasim Ali, Principal Lawyer at Nihang Law, leads a full-service team that can assess both your wrongful dismissal entitlement and your immigration status options simultaneously, without requiring you to coordinate between separate firms.
What to Do in the First 14 Days After Being Fired
Being terminated is disorienting. Knowing your next steps — in order — can make an enormous difference to your outcome.
-
1
Do not sign the severance release yet.
You are not required to sign immediately. It is entirely reasonable to ask for two weeks to review the offer. Any employer who refuses time to review a document that permanently waives your legal rights deserves careful scrutiny.
-
2
Secure your documents.
Gather and safeguard: your original employment contract and any amendments, offer letter, recent pay stubs, the formal termination letter, and any written communications about your performance or conduct.
-
3
Know your deadlines.
Under Ontario’s Limitations Act, 2002, the general limitation period for a wrongful dismissal court claim is two years from the date of termination. ESA Ministry complaints also carry a two-year window. Early action preserves evidence and creates more options.
-
4
Stay off social media.
What you post publicly about your employer, the circumstances of your termination, or your situation can be used against you in negotiations or proceedings. Say nothing until you have legal advice.
-
5
Speak with an employment lawyer.
Many employment lawyers offer free or reduced-fee initial consultations to review severance offers. A qualified lawyer can, in a single meeting, assess whether the offer reflects your full entitlement or whether there is a basis to negotiate or litigate.
-
6
If on a work permit — contact an immigration lawyer the same day.
Losing your employment may affect your immigration status depending on your permit type. Do not wait until your employment matter is resolved — both issues need attention in parallel.
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Your First 14 Days After Termination
A clear action roadmap — follow these steps before signing anything or making any decisions
Nihang Law Professional Corporation · Law Society of Ontario · For informational purposes only. This checklist does not constitute legal advice.
Common Mistakes Ontario Employees Make After Being Terminated
These are the seven most consequential errors that can reduce — or eliminate — the severance an employee is entitled to receive.
- •Signing the severance release immediately. Employers often present a release on termination day, sometimes with a tight deadline. Signing before understanding your full legal entitlement permanently waives your right to claim more — and that additional entitlement may be worth tens of thousands of dollars.
- •Assuming the employment contract controls everything. Many employees see the termination clause and accept it as final. Ontario courts have been invalidating these clauses at a high rate since 2020 — the contract limitation may not be legally enforceable at all.
- •Filing an ESA complaint and a wrongful dismissal lawsuit at the same time. Ontario law requires employees to choose one pathway for the same termination. Pursuing both is not permitted and may compromise both claims.
- •Accepting that a “layoff” is not a termination. In Ontario, a temporary layoff lasting more than 13 weeks in a 20-week period may legally constitute a termination, triggering full severance rights — regardless of what the employer calls it.
- •Forgetting about benefits, bonuses, and commissions. Severance is not just base salary. Courts calculate reasonable notice to include the full compensation package — bonuses, commissions, RRSP matching, and benefits continuation. An offer calculated on base salary alone may significantly understate your entitlement.
- •Waiting too long to seek legal advice. While the two-year limitation period may seem generous, gathering evidence and building a negotiating position takes time. Early consultation costs you nothing and can meaningfully improve your outcome.
- •Overlooking the duty to mitigate. Employees pursuing common law wrongful dismissal claims are expected to make reasonable efforts to find new comparable employment. Courts may reduce an award if this duty was not met. Document every job search activity from day one.
Frequently Asked Questions About Wrongful Dismissal & Severance in Ontario
What is the difference between termination pay and severance pay in Ontario?
How much severance am I entitled to after 5, 10, or 15 years of service in Ontario?
Can my employer fire me without cause in Ontario, and do they have to give me a reason?
What does it mean if my termination clause is unenforceable in Ontario?
Am I entitled to severance if I was classified as an independent contractor, not an employee?
What is constructive dismissal, and does it entitle me to severance?
Does wrongful dismissal law in Ontario apply to me if I am on a work permit or am a newcomer?
How long do I have to file a wrongful dismissal claim in Ontario?
Not Sure If Your Severance Offer Is Fair?
Ontario employment law gives workers significant protections that many employers do not volunteer upfront. You are not obligated to accept the first offer placed in front of you. The team at Nihang Law serves clients across Toronto, Scarborough, and the broader GTA.
Contact Us for a Consultation
About the Author
Qasim Ali
Principal Lawyer · Nihang Law Professional Corporation · Toronto & Scarborough, Ontario · Law Society of Ontario
Qasim Ali is the Principal Lawyer at Nihang Law Professional Corporation, serving clients across Toronto, Scarborough, and the broader Greater Toronto Area. He provides full-service legal representation across immigration, real estate, family law, criminal law, civil litigation, employment law, wills and estates, and business law.
Nihang Law is particularly recognised for its depth in both immigration and employment law — a combination that uniquely serves newcomers and work permit holders who face both legal challenges simultaneously.
Learn more about Qasim Ali →Sources & References
- Employment Standards Act, 2000 — Termination of Employment. Government of Ontario. ontario.ca/document/your-guide-employment-standards-act-0/termination-employment
- Employment Standards Act, 2000 — Severance Pay. Government of Ontario. ontario.ca/document/your-guide-employment-standards-act-0/severance-pay
- Waksdale v. Swegon North America Inc., 2020 ONCA 391. CanLII. canlii.org/en/on/onca/doc/2020/2020onca391/2020onca391.html
- Dufault v. The Corporation of the Township of Ignace, 2024 ONCA 915. CanLII. canlii.org/en/on/onca/doc/2024/2024onca915/2024onca915.html
- Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952. CanLII. canlii.org/en/on/onsc/doc/2025/2025onsc952/2025onsc952.html
- Bardal v. Globe & Mail Ltd., [1960] CanLII 294 (ON SC). canlii.org/en/on/onsc/doc/1960/1960canlii294/1960canlii294.html
- Limitations Act, 2002. Government of Ontario. ontario.ca/laws/statute/02l24
- Termination, Layoff or Dismissal — Federal Standards. Government of Canada. canada.ca/en/services/jobs/workplace/federal-labour-standards/termination.html
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