Severance Pay in Canada

If you’ve been dismissed or terminated from your workplace within the past few months, you’re entitled to collect what’s called severance pay. Severance pay is just that—compensation or a monetary claim from your previous place of work, claimed for the purpose of helping your transition to another workplace. Severance pay is an oft included condition in many places of work across the United States and Canada.

How do you end up qualifying for severance pay in Canada? For one, you qualify for severance pay if your employer dismisses or ends your  employment, if you’ve received an inferential dismissal from your employer or if your employer has laid you off for a period of at least 35 or more consecutive weeks.

Additional conditions for qualifying for severance pay in Canada include:

  • if you’ve worked for your employer for a period of at least five years;
  • if your employer has a certain payroll threshold, specified by province;
  • if your employer has dismissed at least 50 employees in a six month period or after a particular business and/or organization closes.

If you’re living in Canada, you can receive severance pay benefits if you’ve worked with your former employer for at least 12 consecutive months of employment before being terminated or dismissed from your job. This, however, applies to you if you’ve been dismissed or laid off for a number of circumstances, leading to your eventual termination.

Severance pay has additional conditions for those interested in taking advantage of this opportunity. For example, severance pay in Canada doesn’t allow you to collect benefits if:

  • you were rightly dismissed in the case of a conscionable reason;
  • if you didn’t return to work after your employer called back following a layoff;
  • if you’ve qualified for a pension under a registered pension plan, such as the Canada Pension Plan or Old Age Security Act, prior to the termination of your job.

If you’re eligible for severance pay in Canada, you need to know how much you’re entitled to receive. To calculate this particular amount, you can multiply your regular wages for a typical work week by the sum of years you’ve completed employment, in addition to the amount of completed months you’ve worked divided by 12 for years that weren’t complete.

You’re also entitled to collect up to two days of regular wages for each year you’ve worked for a particular employer before your termination. The minimum of this benefit is around five years.