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Severance Pay in Canada: What You're Actually Owed When the Meeting Happens

Stephen HumphreyFounder, Hibiscus HR··7 min read

The meeting is almost always short. Twelve minutes, maybe fifteen. A calendar invite appears an hour before, sometimes ten minutes before, with a vague title — "quick chat," "touch base," "HR sync." The person on the other end of the Zoom has a document shared to their screen already, and they are reading from it, because the words are legally important and no one wants to freelance. Your role reports to have changed. Effective today. Your access will be cut at the end of the call. We are offering you a package. Here is a PDF. You have ten days to sign.

I watched a lot of these calls in 2023 and 2024. Not as the person in the meeting. As the person downstream, rebuilding the HR system after the company that let those employees go realized that the way they had handled it was going to cost them a lot more than they thought. And as someone who had friends, old colleagues, people whose work I respected, show up on LinkedIn with the green "open to work" banner on a Tuesday morning that had not been a Tuesday morning of that kind the week before.

The tech layoff wave that ran from late 2022 through the end of 2024 was the largest coordinated reduction in Canadian white-collar employment in a generation. Shopify, Bell Media, Rogers, banks, the long tail of Series A and B startups that ran out of runway, and in December of 2024 a fully staffed accounting software company that told its entire workforce by email on a Sunday afternoon that they did not need to come in on Monday. In most of those cases, the package handed to the departing employee on termination day was the statutory minimum under their province's Employment Standards Act. And in most of those cases, the employee signed it.

This post is about what was on the other side of that signature.

The number on the PDF is a floor

Every Canadian province has an Employment Standards Act that sets a minimum amount of notice (or pay in lieu of notice) an employer must give when terminating an employee without cause. Two weeks after a year of service. Three weeks after three years. Eight weeks at a five or eight-year cap, depending on the jurisdiction. The severance pay calculator on this site computes those numbers exactly — they are not complicated, and they are usually not generous.

The statutory number is the floor. It is the minimum an employer must pay to avoid breaking the law. Almost no one, not a lawyer, regulator, former HR director I have spoken to, believes it is what the employee is actually owed in most terminations.

What the employee is actually owed, in most terminations, is common-law reasonable notice under the Supreme Court's 1960 decision in Bardal v. Globe & Mail. The Bardal factors are four things: the employee's age, their length of service, the character of the employment (senior, specialized, hard to replace), and the availability of similar employment in the current labour market. A court weighing those factors will arrive at a number that is almost always longer than the statutory minimum, and in senior or long-tenured cases it is longer by an order of magnitude.

A concrete example. A 54-year-old senior software engineer in Ontario with twelve years of tenure, terminated in a soft tech market. The Ontario ESA entitles them to eight weeks of notice plus twelve weeks of s.64 severance, so twenty weeks. A court applying Bardal would typically land at fifteen to eighteen months of reasonable notice. Sixty to seventy weeks. The employer's package: twenty weeks. The worker's real entitlement: three to four times that.

Most workers never see the larger number. The package arrives with a release attached. The release, once signed, eliminates the common-law claim. The employee accepts the statutory floor. And the employer is relieved to pay it, because they knew the floor was not the ceiling the whole time.

The ten-day window is not a coincidence

The typical package includes a signature deadline. "Please sign and return within ten days." Sometimes seven. Sometimes fourteen. It is always short enough that an employee who wants to consult an employment lawyer has to do it in a hurry, and usually short enough that an employee without legal savings cannot afford to at all.

The deadline is there by design. The best time for an employer to settle a termination is before the terminated employee has had the Bardal conversation with a lawyer. Once that conversation has happened, the negotiation starts at a different number.

If you are the person holding that package: the deadline is not a legal requirement. It is a contract term proposed by the employer. Nothing stops you from calling an employment lawyer, asking for a free consultation (most give them), and finding out what the Bardal range actually is for someone with your age, tenure, role, and market. If the answer is meaningfully higher than the package, a letter from the lawyer almost always produces a revised offer — without anyone going to court.

If you are the founder or HR lead handing that package over: you already know this. Do not pretend the deadline is a legal one. Do not suggest the employee would be "unreasonable" to consult counsel. Budget for the fact that the fair number is usually higher than the statutory one, and the good employers handle that conversation up front rather than after a lawyer's letter arrives.

Province by province, what the floor actually is

For a 5-year employee terminated without cause, statutory minimum notice (or pay in lieu):

Province Minimum notice (5 years) Additional statutory severance?
Ontario 5 weeks Yes — s.64, if employer meets the $2.5M payroll or 50+ mass-termination test. Stacks on top of notice.
British Columbia 5 weeks No
Alberta 5 weeks No
Quebec 4 weeks No — but CNESST protections differ in several other ways
Manitoba 4 weeks No
Saskatchewan 4 weeks No
Nova Scotia 4 weeks No
New Brunswick 4 weeks No
PEI 4 weeks No
Newfoundland 3 weeks No
Federal 2 weeks or 2 days per year of service (whichever is greater) Yes — Canada Labour Code s.235, one-off payment

These are numbers most employees could look up on a calculator in five minutes. The harder question — what the Bardal factors would produce for your specific situation — is the one that usually matters more, and the one that almost always requires a lawyer to answer properly. A common rule of thumb among employment lawyers is "one month per year of service for most employees, with more for senior roles and older workers, capped in practice around 24 months." That is not law. It is pattern-recognition across hundreds of cases. But it is a very different number than what is on the PDF.

The things HR forgets to mention

On termination day, a few items routinely go missing from the conversation:

  • Accrued vacation pay. Legally owed on final pay in every province. Gets overlooked when HR is writing the termination letter in a hurry.
  • Benefits continuation. In most provinces, the statutory notice period includes benefits continuation — health, dental, life insurance — not just salary. If you are being paid out in lieu of notice, ask explicitly whether benefits continue for the equivalent period, or whether they are being cut on termination day. The answer changes the real value of the package.
  • Outstanding commissions, bonuses, or RSU vesting. If a bonus or vest would have landed during what would have been the notice period, argue it should be paid out. Many employment contracts say it will not be. Many of those clauses are unenforceable.
  • ROE filing on time. Your Record of Employment should be filed within five days of the last day worked. If it is late, your EI claim is late. If you do not know whether it was filed, call your former employer and ask. The ROE playbook post has the details.
  • The EI offset. Severance paid as salary continuance defers the start of your EI claim by the number of weeks you are being paid. Severance paid as a lump sum does not — Service Canada allocates it against your claim differently. This affects cash flow if you are counting on EI starting immediately.

If you are the employer

If you are a founder or HR lead reading this and feeling uncomfortable — good. The people on the other side of the termination meeting are not abstract. They are forty-seven years old, they have a mortgage, they have two kids in daycare, they have been loyal to your company for nine years, and they are about to sign a piece of paper that gives up a meaningful fraction of what the law says they are entitled to, because they cannot afford not to sign it.

The employers I have watched handle terminations well in the 2023–2024 wave did four things. They budgeted for packages above the statutory floor, closer to what they believed Bardal would produce. They gave real notice of the deadline (thirty days, not ten). They did not pretend the statutory number was generous. And they filed the ROE on time, accurately, with the right reason code, so the employee's EI was not delayed by an administrative mistake on top of everything else.

This is not charity. The companies that terminated well in 2023 and 2024 spent less on lawyers, spent less on settlements, and — perhaps more importantly — did not have their termination patterns show up in Glassdoor reviews, reference calls, and the Toronto tech Slack channels that every future candidate eventually ends up in. The companies that terminated badly paid more on average, and paid in reputation besides.

The thing I want you to take from this

If you are the person holding the PDF: the number on it is not the number you are owed. It is the number the employer is offering. Before you sign, call a lawyer. Almost all of them offer a free thirty-minute consultation. Ask them what Bardal looks like for you. If the answer is meaningfully larger than the offer, negotiate — or have the lawyer negotiate for you. The downside of asking is nothing. The downside of not asking is the difference between what the package says and what the law actually says, and that difference is often measured in six figures.

If you are the person writing the PDF: build the calculation on the assumption that the real number is higher than the statutory floor. Offer it in the first package, not the revised one. And handle the meeting with the assumption that the person on the other side of the screen is someone's spouse, parent, child, or friend — not a line item on a reduction spreadsheet.

The 2023–2024 wave is not over. The next one is already starting somewhere. When it gets to your company, no matter which side of the table you sit on, at least now you know what the numbers are actually supposed to look like.

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SH

Stephen Humphrey

Founder, Hibiscus HR

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Hibiscus HR applies provincial overtime rules automatically and warns you before the pay run goes out — for every province, every territory, federal jurisdiction.