Termination pay vs severance pay (2026): what the two words actually mean

Termination pay is the money that replaces the written notice your employer did not give you. Severance pay, in the statutory sense, is a separate amount paid on top of that for the years you put in, and only two of Canada's fourteen employment standards statutes have one: Ontario's ESA and the Canada Labour Code. In the other twelve jurisdictions there is a single entitlement, and everything people locally call "severance" is termination pay under another name. The severance package your employer offers is a third thing again: an offer, not a statutory amount. This page is part of the severance pay hub.

Updated September 6, 2026 · Figures verified against the statutes of each jurisdiction · see all figures and their sources

Five things people mean by "severance"

Almost every argument about severance is really two people using one word for different things. Here are the five, in the order they arise when a job ends.

1. Notice of termination. Written notice that your job will end on a date, given in advance. You keep working and keep being paid through it. Every jurisdiction requires it once you have the qualifying service.
2. Termination pay, also called pay in lieu of notice. The employer skips some or all of the notice and pays the wages for that period instead. This is what the great majority of Canadians actually receive, and it is what most people are describing when they say "my severance".
3. Statutory severance pay. A separate entitlement based on your years of service, paid on top of the notice or the pay in lieu. Ontario (ESA s. 64) and the federal jurisdiction (CLC s. 235) have it; nowhere else does.
4. The severance package. Whatever your employer puts in front of you, usually a lump sum or salary continuance in exchange for a signed release. It has no statutory definition. It can be worth more than the floor or less.
5. Common law reasonable notice. What a court outside Quebec may award when a dismissed employee sues, on facts a schedule cannot see. This site does not calculate it and publishes no amounts for it.

Items one to three are what the calculator on each jurisdiction page works out. Item four is what you compare the result against. Item five is what an employment lawyer is for.

Which jurisdictions have a separate severance pay

Ontario: two entitlements, two tests

Ontario is the jurisdiction where getting this right changes the number. Termination pay under ESA s. 61 is the wages you would have earned during the notice period the schedule gives you, paid as a lump sum, with benefit contributions kept up through that period. Severance pay under sections 64 and 65 is an entirely separate calculation with its own two-part test: 5 years of employment, and an employer with a payroll of $2,500,000.00 or more or a permanent shutdown that severed 50 employees or more.

Two differences are worth memorizing. Notice is banded and ignores your leftover months; severance counts them as twelfths of a year. Notice tops out at 8 weeks; severance runs to 26 weeks. For a long-service employee of a large Ontario employer, the severance line is the bigger one, and an offer that quietly covers only the notice is short.

Federally regulated jobs: the same structure, different arithmetic

If your employer is a bank, an airline, a railway, an interprovincial trucking company, a telecom or broadcaster, a port, or most Crown corporations, the Canada Labour Code applies wherever in Canada you work. It has the same two layers, notice under CLC s. 230 and severance under CLC s. 235, but the severance side is measured in days rather than weeks and has no employer-size test at all.

So a federally regulated employee with modest service gets severance where an Ontario employee with the same service gets none, and a very long-service federal employee keeps accruing where the Ontario calculation has stopped at its ceiling.

What the other twelve statutes actually call it

Everywhere else the Act provides one thing, and each legislature named it differently. The vocabulary is worth knowing because it tells you what to search for in your own statute.

• British Columbia calls it compensation for length of service, and it is the default rather than the exception: the employer owes it on the day the job ends unless it gave the notice instead (BC ESA s. 63).
• Quebec calls it a compensatory indemnity, equal to your regular wage, overtime excluded, for the notice weeks that were not given (LSA s. 83).
• Manitoba calls it wages in lieu of notice, and it is owed even if you have already found another job (ESC s. 77).
• Saskatchewan calls it pay instead of notice, and it is the greater of what you earned in the period and your normal wages for it (SEA s. 2-61).
• Alberta, Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island, Yukon, the Northwest Territories and Nunavut all use termination pay or pay in lieu of notice, with their own wording for how the weekly amount is worked out.

None of that is a smaller entitlement because of the name. It simply means that in those twelve jurisdictions there is no second, service-based amount to ask for, and a calculation that shows a severance line of zero there is correct rather than broken.

A worked example: where the two lines separate

Alex earns $1,250 for a regular work week and completes six years before the job ends with no working notice. The employer's Ontario payroll is comfortably over the threshold.

• Termination pay covers the notice that was not given: 6 weeks at $7,500.00.
• Statutory severance pay covers the years: $7,500.00.
• Both are owed, so the two together come to $15,000.00, before the accrued vacation pay is added.

At this length of service the two happen to be the same size, which makes the point cleanly: an employer who pays the notice line, calls it severance and stops has paid about half the statutory floor. Move Alex to Alberta with the same pay and the same six years, and the floor is $6,250.00 of termination pay with no severance line at all, because Alberta's Code has only the one entitlement. The wage and the dates are invented; every week comes from the section named in the tables.

How the calculator labels each line

The tool on every jurisdiction page uses the statutory vocabulary rather than the workplace vocabulary, so you can match its lines to your own statement.

• Notice owed, in weeks, from your Act's schedule, with any written working notice you actually received subtracted.
• Pay in lieu of notice, in dollars, for the weeks of notice you did not get.
• Statutory severance, in dollars, with the qualifying test spelled out. In twelve jurisdictions this line is zero and says so.
• Vacation pay owed, in dollars, on the wages that have not yet had vacation pay paid on them.
• Total statutory minimum, and the deadline by which your final pay must arrive.

Under those lines it repeats one sentence that matters more than any of them: these are the statutory minimums, and a lawyer may recover more under the common law or your contract. Every tool on the site is listed in calculators.

What Employment Insurance does with each of them

Employment Insurance does not care which name your employer used. Severance pay, termination pay, pay in lieu, a retiring allowance and the vacation pay paid out on your last cheque are all "separation money", and under the permanent rule they are allocated to the weeks after your last day, delaying the start of benefits without reducing the number of weeks you get. Right now a temporary measure switches that treatment off, and it has an end date on it.

The full picture, including what happens when the measure lapses, is in severance pay and EI.