Terminations and Offboarding in Canada Internal

What is the notice period in Canada?

Please reference the Basic Country Requirements in Canada article. 

Is unused leave paid out at the time of termination?

Yes, employers must pay out any remaining vacation pay accruals upon termination. In Canada, you pay out the vacation pay accrual balance, not the time remaining.

What is the severance payment in Canada?

Severance pay is compensation that is paid to a qualified employee who has their employment "severed." It compensates an employee for losses (such as loss of seniority) that occur when a long-term employee loses their job. 

Only employees that reside in Ontario are entitled to severance pay as per the minimum standards outlined in provincial legislation. An employee qualifies for severance only when they have worked for the employer for five or more years. Please note that while Ontario is the only province where severance pay is statutorily required, it is common practice to offer it in other provinces (see more details below). 

To calculate the amount of severance pay an employee is entitled to receive (in Ontario), multiply the employee's regular wages for a regular work week by the sum of:

• the number of completed years of employment; and
• the number of completed months of employment divided by 12 for a year that is not completed.

The maximum amount of severance pay required to be paid under the Employment Standards Act (ESA) is 26 weeks.

As termination can be quite sensitive and complex, and to ensure a smooth termination process, we typically recommend adding an enhanced severence package, regardless of minimum standards. We recommend this enhancement to mitigate any risk arising from the offboarding process. Please note that this enhancement is only paid once these risks have been mitigated.

Employees in provinces other than Ontario are not entitled to severance pay. However, the guidance regarding an enhancement continue to apply.

In some provinces, once an employee reaches five years of continuous service, they become entitled to an additional severance payment upon termination without just cause.