Canada Layoff Guide: Your Rights When Terminated in Canada
If you've been laid off in Canada, you have important legal protections. Canadian employment law provides strong termination rights, including notice periods, severance pay, and Employment Insurance (EI) benefits. This guide explains your rights under both federal and provincial law.
Important Note: This guide provides general information about Canadian employment law. Laws vary by province and whether you're federally or provincially regulated. Consult an employment lawyer for advice specific to your situation.
Understanding Termination in Canada
Key Concepts
Termination Pay (Pay in Lieu of Notice):
- Minimum pay required when employment ends
- Based on length of service
- Set by employment standards legislation
Severance Pay:
- Additional entitlement in some provinces
- Usually for longer-service employees
- Separate from termination pay
Common Law Notice:
- What courts say you're entitled to
- Often significantly more than statutory minimums
- Based on various factors
Federal vs. Provincial
Most employees are provincially regulated. Federally regulated industries include:
- Banks
- Telecommunications
- Airlines and airports
- Interprovincial transportation
- Broadcasting
- Crown corporations
Statutory Minimums by Province
Ontario
Termination Pay:
| Service | Notice/Pay |
|---|---|
| Less than 1 year | 1 week |
| 1-3 years | 2 weeks |
| 3-4 years | 3 weeks |
| 4-5 years | 4 weeks |
| 5-6 years | 5 weeks |
| 6-7 years | 6 weeks |
| 7-8 years | 7 weeks |
| 8+ years | 8 weeks |
Severance Pay (Ontario):
- 5+ years service AND employer payroll $2.5M+
- OR 50+ employees terminated in 6 months
- 1 week per year, maximum 26 weeks
British Columbia
Termination Pay:
| Service | Notice/Pay |
|---|---|
| 3 months - 1 year | 1 week |
| 1-3 years | 2 weeks |
| 3-4 years | 3 weeks |
| 4-5 years | 4 weeks |
| 5-6 years | 5 weeks |
| 6-7 years | 6 weeks |
| 7-8 years | 7 weeks |
| 8+ years | 8 weeks |
No statutory severance pay in BC (only termination pay).
Alberta
Termination Pay:
| Service | Notice/Pay |
|---|---|
| 3 months - 2 years | 1 week |
| 2-4 years | 2 weeks |
| 4-6 years | 4 weeks |
| 6-8 years | 5 weeks |
| 8-10 years | 6 weeks |
| 10+ years | 8 weeks |
No statutory severance pay in Alberta.
Quebec
Termination Pay:
| Service | Notice/Pay |
|---|---|
| 3 months - 1 year | 1 week |
| 1-5 years | 2 weeks |
| 5-10 years | 4 weeks |
| 10+ years | 8 weeks |
No statutory severance pay in Quebec (but common law may apply).
Common Law Entitlements
Beyond Statutory Minimums
Courts often award much more than statutory minimums. Common law notice considers:
- Length of service
- Age
- Position/seniority
- Availability of similar employment
- Manner of dismissal
- Inducement to join
Bardal Factors
Named after a key court case, these factors determine reasonable notice:
- Character of employment
- Length of service
- Age of employee
- Availability of similar employment
Typical Common Law Awards
| Service | Typical Range |
|---|---|
| 1-3 years | 2-6 months |
| 3-5 years | 4-8 months |
| 5-10 years | 6-12 months |
| 10-15 years | 10-16 months |
| 15-20 years | 14-20 months |
| 20+ years | 18-24 months |
Note: Maximum is generally 24 months, though exceptions exist.
Don't Accept Minimums Quickly
Many employers offer only statutory minimums. You may be entitled to significantly more under common law. Consult a lawyer before signing.
Employment Insurance (EI)
Eligibility
To qualify for EI regular benefits:
- Lost job through no fault of your own
- Worked required insurable hours (varies by region, typically 420-700)
- Ready, willing, and able to work
- Actively looking for work
Benefit Amount
- 55% of average insurable earnings
- Maximum $668/week (2024)
- Duration: 14-45 weeks depending on hours worked and regional unemployment rate
Applying
- Apply immediately after last day of work
- Apply online at canada.ca
- One-week waiting period before payments start
- Don't delay—benefits not retroactive
Severance and EI
If you received severance:
- Lump sum: Allocated to weeks after termination
- May delay EI payments
- Report accurately on application
Termination Letter and ROE
Record of Employment (ROE)
Employers must provide ROE:
- Within 5 calendar days of end of pay period
- Shows insurable hours and earnings
- Needed for EI application
- Can be electronic (check My Service Canada Account)
What to Request
Ask employer for:
- Written termination letter (reasons, effective date)
- ROE (or confirm electronic submission)
- Details of severance/termination offer
- Vacation pay owing
- Benefit continuation information
Mass Layoffs
Group Termination Rules
Most provinces require additional notice for mass layoffs:
Ontario (50+ employees):
- 8 weeks notice for 50-199 employees
- 12 weeks notice for 200-499 employees
- 16 weeks notice for 500+ employees
Federal (50+ employees):
- 16 weeks notice
- Must notify Minister of Labour
Constructive Dismissal
What It Is
Constructive dismissal occurs when employer:
- Significantly changes job duties
- Reduces compensation substantially
- Demotes without consent
- Creates hostile work environment
- Forces relocation
Your Options
If constructively dismissed:
- May resign and claim termination entitlements
- Must act promptly (don't appear to accept changes)
- Consult lawyer before resigning
Wrongful Dismissal
When to Consider Legal Action
You may have a claim if:
- Offered less than reasonable notice
- Terminated without cause but denied severance
- Dismissed for discriminatory reasons
- Constructively dismissed
Human Rights Protections
Cannot be terminated based on:
- Race, colour, ancestry
- Religion
- Sex, gender identity
- Sexual orientation
- Age
- Disability
- Family status
- Marital status
Negotiating Severance
What to Negotiate
- More weeks of termination pay
- Extended health benefits
- Outplacement services
- Reference letter
- Bonus pro-ration
- Stock option vesting
- Non-disparagement terms
Before Signing
- Don't sign immediately—take time to review
- Understand what you're giving up
- Get independent legal advice
- Many employers expect negotiation
Tax Implications
What's Taxable
All termination and severance pay is taxable income:
- Included in income for year received
- May push you into higher bracket
- Withholding may not cover full tax
Retiring Allowance Transfer
Portion may be transferable to RRSP:
- $2,000 per year of service before 1996
- Plus $1,500 per year before 1989 if no pension
- Reduces immediate tax impact
Get Tax Advice
Consider consulting accountant about:
- RRSP contribution room
- Timing of payments
- Estimated tax liability
Provincial Resources
Employment Standards Offices
- Ontario: Ministry of Labour
- BC: Employment Standards Branch
- Alberta: Employment Standards
- Quebec: CNESST
Legal Help
- Employment lawyers (many offer free consultations)
- Legal aid (if eligible)
- Community legal clinics
Action Checklist
When Laid Off
- [ ] Request written termination letter
- [ ] Confirm ROE will be issued
- [ ] Calculate vacation pay owing
- [ ] Note benefit end dates
- [ ] Don't sign anything immediately
- [ ] Consult employment lawyer
- [ ] Apply for EI promptly
- [ ] Review common law entitlements
Evaluating an Offer
- [ ] Compare to statutory minimums
- [ ] Consider common law entitlements
- [ ] Factor in age and service
- [ ] Assess job market for your field
- [ ] Get legal advice before signing
- [ ] Negotiate if appropriate
Key Takeaways
- Statutory minimums are just that—minimums. Common law often provides more.
- Common law notice can be 12-24 months for longer-service employees
- Don't sign quickly—take time to understand your entitlements
- Apply for EI immediately—there's a waiting period
- Severance affects EI—but doesn't disqualify you
- Get legal advice—many lawyers offer free consultations
- Province matters—rules vary significantly
- Age and service matter—factor into common law awards
- Keep documentation—termination letter, ROE, offer
- Negotiate—employers often expect it
Remember: This guide provides general information. Canadian employment law varies by province and individual circumstances. Consult an employment lawyer for advice specific to your situation.