Ontario Severance Pay Calculator 2026
Estimate ESA statutory minimum (1 week/year, 5+ years) and common-law reasonable notice for Ontario. Free — no sign-up required.
Estimate your severance — Ontario
ESA requires 1 week/year (5+ years, payroll ≥$2.5M). Common law typically awards 1–2 months/year.
Canada Severance Estimator
ESA minimum + common-law reasonable notice by province
Results update live. This is a ballpark estimate — consult an employment lawyer for legal advice.
Common-law estimate — Ontario
$26,923
~20 weeks · $1,346/week
Based on ~1 month per year (4 weeks/year). Actual common-law award varies by Bardal factors: age, tenure, character of employment, and availability of similar work. Senior or specialized roles may receive significantly more.
ESA statutory minimum
$6,731
5 weeks · legal floor
ESA vs Common-law comparison
Estimate only. ESA is the legal floor; common law often awards more. Consult an employment lawyer before accepting or negotiating your package.
Severance law in Ontario
1ESA severance — the statutory floor
Ontario's Employment Standards Act requires 1 week of pay per year of service (up to 26 weeks) for employees with 5+ years at employers with global payroll ≥$2.5M, or where 50+ employees were terminated in a 6-month period. ESA severance and ESA termination pay are separate entitlements — both may apply.
2Common law — typically much more
ESA is the floor. Courts frequently award 1–2 months per year under common law reasonable notice, based on Bardal factors. Many Ontario employees are entitled to significantly more than the ESA minimum. Employer first offers typically reflect ESA only — consider consulting an employment lawyer before accepting. See our EI Benefits Calculator for post-severance income planning.
✓ Currently active — apply for EI on your last day
For EI claims established or allocations starting between March 30, 2025 and October 10, 2026, the federal government has suspended the treatment of separation monies as allocated earnings. Pay in lieu of notice, severance, and other exit payments received from Ontario employers do not delay or reduce your EI benefits during this window. Source: Canada Gazette Vol. 160, No. 7 (April 8, 2026).
After October 10, 2026 — Ontario ESA rules
Ontario employers may pay both termination pay (1–8 weeks, ESA notice — treated as employment income, delays EI) and ESA severance (1 wk/yr, 5+ yrs — retiring allowance, generally does not delay EI). The two entitlements have different EI implications.
ESA notice entitlement — Ontario
1–8 weeks (graduated: 1 week at 3 months to 8 weeks at 8+ years under Ontario ESA)
In 2026: CPP employee rate 5.95% on earnings $3,500–$74,600 (max $4,230.45). CPP2 rate 4% on $74,600–$85,000 (max $416). EI premium 1.63% on insurable earnings up to $68,900 (max $1,123.07).
| Payment type | CPP (5.95%) | EI (1.63%) |
|---|---|---|
| Pay in lieu of notice | Yes — max $4,230 | Yes — max $1,123 |
| Retiring allowance / true severance | No — exempt | No — exempt |
| Ontario ESA severance (1 wk/yr, 5+ yrs) | No — retiring allowance | No — retiring allowance |
Sources: CRA payroll deductions guide; Canada.ca CPP & EI 2026 tables.
Under ITA paragraph 60(j.1), the eligible portion of a retiring allowance transfers to your RRSP at $2,000 × pre-1996 service years — without consuming existing RRSP room. In Ontario, with a combined top marginal rate of ~46%, the tax deferral is significant.
| Pre-1996 years | Max rollover | Tax deferred (~46%) |
|---|---|---|
| 5 years | $10,000 | ~$4,616 |
| 8 years | $16,000 | ~$7,386 |
| 10 years | $20,000 | ~$9,232 |
| 15 years | $30,000 | ~$13,848 |
How to execute
- Confirm pre-1996 service years with HR before signing the severance agreement.
- Request a direct employer-to-RRSP transfer — no withholding on direct transfers.
- If taken as cash, contribute within 60 days of year-end and complete Schedule 7.
- Box 66 of T4 = eligible retiring allowance; Box 67 = non-eligible.
Source: CRA — Transfer of a retiring allowance; ITA 60(j.1). Consult a tax professional for your specific Ontario situation.