Most Ontario Workers Don’t Know This About Their Severance — And Employers Are Counting on It
A colleague got laid off last spring. Six years at the same company, managed a real team, and built things that mattered. HR called her in, handed her a letter with four weeks’ pay and told her to sign within 48 hours. She signed the same day.
She felt grateful even to get that.
Months later, she found out she might have walked away from several months of additional income. Nobody told her she had options. Nobody was going to.
I’ve heard different versions of this story more times than I can count. The ending is almost always the same: they didn’t know there were two entirely separate legal frameworks deciding what they were owed. They took the number on the paper as the verdict. It wasn’t.
Two laws. One package.
When you’re terminated in Ontario, your severance rights don’t come from one place. They come from two.
The first is the Employment Standards Act (ESA) — the baseline statute most employees have at least vaguely heard of. It sets the floor: how much termination pay you’re owed, under what conditions severance kicks in, and how long the notice period is. Under the ESA, termination pay caps at eight weeks, no matter how long you worked there. That ceiling doesn’t budge.
The second is common law. Entirely different. It isn’t written in a single statute; it comes from court decisions, and it looks at your actual life. How old are you? What kind of role did you hold? How long would it realistically take you to find comparable work? These questions shape what courts call “reasonable notice”, and that number can run months beyond anything the ESA would produce.
The gap between the two isn’t a technicality. Someone let go after six years might get eight weeks under ESA minimums. Under common law, that same person could be entitled to six or seven months.
That’s not a rounding error. That’s months of income most people never know to ask for.
Why employers lead with the ESA number
This isn’t a conspiracy. It’s just math.
Most employers know exactly what they’re doing when they slide a letter across the table. ESA minimums are the cheapest option available. If you accept without asking questions, the file closes and everyone moves on.
The whole thing depends on you not knowing the difference between ESA and common law. And most people don’t. They assume the number HR calculated is the correct number. They assume if there were more, someone would have mentioned it.
Neither of those assumptions holds up.
HR isn’t your advocate. They work for the company. The letter they hand you reflects what the company wants to pay — not necessarily what you’re legally owed.
Your contract might cap you but it might not hold up
Some employment contracts include termination clauses that explicitly limit severance to ESA minimums. If yours does, and it’s properly written, that limitation can stick. Courts will uphold it.
Get Taman Singh Law’s stories in your inbox
Join Medium for free to get updates from this writer.
But “properly written” does a lot of work in that sentence.
Ontario courts have repeatedly struck down termination clauses as vague, ambiguous, or failing to meet the legal standard in effect at the time they were signed. When a clause gets struck down, common law fills the gap automatically, which means the provision your employer was counting on to limit your payout might not protect them at all.
A clause that reads as airtight to someone without legal training can have a technical flaw that changes everything. I’ve seen it in contracts from large, well-resourced companies, not just small businesses drafting their own paperwork.
If you don’t have a written contract, the picture gets simpler: common law protections almost certainly apply to you by default.
The 48-hour deadline is a tactic, not a formality
When a severance offer comes with a tight deadline of 48 hours, sometimes less, it’s presented as routine. It isn’t neutral.
Short deadlines exist to prevent you from consulting a lawyer. That’s their purpose. An employee who has two days to decide is far less likely to get legal advice than one who has two weeks. The urgency is manufactured.
You can ask for more time. Most employers will give it. An employer who refuses to extend a reasonable review window is telling you something about how much they think your entitlement is actually worth and how much they’d prefer you didn’t find out.
What to actually do before signing anything
Don’t sign right away. That’s the starting point.
Pull out your employment contract. Look for any termination language, anything about notice, pay instead of notice, or severance. Think through your work history: how long you were there, what your role involved, and how long it would realistically take to land something comparable. Then speak with an employment lawyer before you put pen to paper. Most offer free consultations for exactly this situation.
If you want a solid breakdown of how the ESA and common law actually compare the specific conditions for each, what drives the common law calculation, and what makes a termination clause unenforceable, I’ve covered it in detail here: ESA vs. Common Law: Severance Pay Rights in Ontario.
The number on that letter is a starting point. Whether it’s also the ending depends entirely on whether you ask the right questions before signing.
This article is for general information only and does not constitute legal advice. If you’ve been terminated, speak with a licensed employment lawyer in Ontario before signing a release.
That severance offer is waiting. So is a better one.
Most employees across Ontario sign within days, not because the offer was fair, but because nobody told them it wasn’t. The ESA number your employer calculated took maybe ten minutes to produce. What they didn’t calculate is what you might actually be owed under common law. Those are two very different figures, and the gap between them is often where months of income live.
Before you sign anything, get a second opinion from someone who only works for employees, not companies.
About the Author
Taman Singh is an employment lawyer with a focused practice in wrongful dismissals and severance negotiations. He is dedicated to advocating for employees and ensuring they receive the compensation they are rightfully owed. With a sharp understanding of Ontario employment law and a results-driven approach, Taman consistently helps clients navigate complex workplace disputes and maximise their severance.
