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The Difference Between Termination Pay, Severance Pay, and a Severance Package
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Class aptent taciti
Sociosqu ad litora torquent per conubia nostra, per inceptos himenaeos. Curabitur accumsan, massa in consectetur tincidunt, lorem mi sodales nulla, at fermentum enim risus sed libero. Suspendisse iaculis hendrerit diam, quis sagittis risus venenatis vel. Integer interdum lorem eu orci auctor consectetur sed eget ante. In accumsan laoreet elit nec rutrum. Aliquam blandit diam in augue pellentesque tincidunt. Suspendisse non accumsan ex, at varius ante.
Quisque congue vitae augue quis cursus.
Fusce eleifend, mi id posuere malesuada, ante arcu interdum lacus, et fermentum eros orci sit amet tellus. Quisque sem ante, placerat non scelerisque sit amet, luctus ut dui. Sed facilisis rhoncus sapien, nec varius tortor. Aliquam eleifend placerat justo, et consectetur sapien viverra ultricies. Donec vel tristique justo, non congue erat.
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Phasellus auctor lorem
Non augue condimentum convallis. Donec id nulla semper eros elementum lacinia. Pellentesque nisl quam, posuere id mi eget, porttitor eleifend elit. Donec nec sapien at enim ultrices suscipit blandit et ipsum. Sed purus massa, suscipit nec eros sit amet, condimentum scelerisque ipsum. Nunc nisl urna, fringilla at massa aliquam, aliquet scelerisque augue.
Aenean gravida odio sit amet magna egestas
Sed pulvinar lectus ultricies. Donec in ex tincidunt, aliquet sem et, suscipit lacus. Vivamus risus dolor, condimentum sit amet ante ut, vestibulum condimentum mauris. Nunc nec dictum felis. Donec vel maximus ligula, vitae venenatis nisl. Sed non arcu ut tortor fringilla volutpat. Ut eu velit mauris. Etiam magna odio, varius in mollis vitae, venenatis ac sem. Fusce id turpis efficitur, molestie lacus sed, imperdiet ante. Praesent hendrerit venenatis malesuada.
Class aptent taciti
Sociosqu ad litora torquent per conubia nostra, per inceptos himenaeos. Curabitur accumsan, massa in consectetur tincidunt, lorem mi sodales nulla, at fermentum enim risus sed libero. Suspendisse iaculis hendrerit diam, quis sagittis risus venenatis vel. Integer interdum lorem eu orci auctor consectetur sed eget ante. In accumsan laoreet elit nec rutrum. Aliquam blandit diam in augue pellentesque tincidunt. Suspendisse non accumsan ex, at varius ante.
Quisque congue vitae augue quis cursus.
Fusce eleifend, mi id posuere malesuada, ante arcu interdum lacus, et fermentum eros orci sit amet tellus. Quisque sem ante, placerat non scelerisque sit amet, luctus ut dui. Sed facilisis rhoncus sapien, nec varius tortor. Aliquam eleifend placerat justo, et consectetur sapien viverra ultricies. Donec vel tristique justo, non congue erat.
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Phasellus auctor lorem
Non augue condimentum convallis. Donec id nulla semper eros elementum lacinia. Pellentesque nisl quam, posuere id mi eget, porttitor eleifend elit. Donec nec sapien at enim ultrices suscipit blandit et ipsum. Sed purus massa, suscipit nec eros sit amet, condimentum scelerisque ipsum. Nunc nisl urna, fringilla at massa aliquam, aliquet scelerisque augue.
Aenean gravida odio sit amet magna egestas
Sed pulvinar lectus ultricies. Donec in ex tincidunt, aliquet sem et, suscipit lacus. Vivamus risus dolor, condimentum sit amet ante ut, vestibulum condimentum mauris. Nunc nec dictum felis. Donec vel maximus ligula, vitae venenatis nisl. Sed non arcu ut tortor fringilla volutpat. Ut eu velit mauris. Etiam magna odio, varius in mollis vitae, venenatis ac sem. Fusce id turpis efficitur, molestie lacus sed, imperdiet ante. Praesent hendrerit venenatis malesuada.
Class aptent taciti
Sociosqu ad litora torquent per conubia nostra, per inceptos himenaeos. Curabitur accumsan, massa in consectetur tincidunt, lorem mi sodales nulla, at fermentum enim risus sed libero. Suspendisse iaculis hendrerit diam, quis sagittis risus venenatis vel. Integer interdum lorem eu orci auctor consectetur sed eget ante. In accumsan laoreet elit nec rutrum. Aliquam blandit diam in augue pellentesque tincidunt. Suspendisse non accumsan ex, at varius ante.
Quisque congue vitae augue quis cursus.
Fusce eleifend, mi id posuere malesuada, ante arcu interdum lacus, et fermentum eros orci sit amet tellus. Quisque sem ante, placerat non scelerisque sit amet, luctus ut dui. Sed facilisis rhoncus sapien, nec varius tortor. Aliquam eleifend placerat justo, et consectetur sapien viverra ultricies. Donec vel tristique justo, non congue erat.
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Termination Pay
With some exceptions, employees who are dismissed without cause are automatically entitled to a minimum notice period calculated in accordance with Ontario’s Employment Standards Act. It is a straight-forward mathematical formula based solely on an employee’s continuous length of service.
If the employer opts to provide pay in lieu of notice, this pay is called “Termination Pay”. The maximum available notice period (or Termination Pay) under the Employment Standards Act is 8 weeks.
Severance Pay
Under the Employment Standards Act, some employees are also entitled to additional compensation called “Severance Pay” (but don’t confuse this with “severance” or “severance package” — the terms are not interchangeable). Employees are entitled to Severance Pay if they have been with the employer for five years or more (including all the time spent by the employee in employment with the employer, whether continuous or not and whether active or not) and:
a) the employer has a payroll in Ontario of at least $2.5 million; or
b) the employer severed the employment of 50 or more employees in a six-month period because all or a part of the business closed.
Under the Employment Standards Act, Severance Pay is paid out at the rate of 1 week’s wages per year (or part year) of service, up to a maximum of 26 weeks. There are rules for the calculation of Severance Pay, which can be found on-line by visiting the Ontario Ministry of Labour’s website.
Severance Pay is intended to compensate an employee for accumulated seniority and job loss (like an earned benefit).
Severance Package
The term “severance package” does not have a precise meaning. It is not even defined in Ontario’s Employment Standards Act. Rather, the term “severance package” generally means a bundled package of financial compensation and benefits that an employer offers to an employee usually upon a without cause termination of employment or to entice an employee to leave.
Final Word
Employees should remember that their statutory entitlements upon termination (i.e. Termination Pay and Severance Pay) are minimums only. Often employees are entitled to greater compensation under the common law doctrine of “reasonable notice”. For that reason, employees should consult with an employment lawyer to determine their full entitlements.
Ertl Lawyers – Ontario Employment Lawyers
If you have questions regarding wrongful dismissal, constructive dismissal, severance pay, or any other employment matter, contact Ertl Lawyers today for a free phone consultation!
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