I Don’t Have an Employment Contract. How Much Severance Am I Owed in Ontario?
Yes, you may still be entitled to severance or termination compensation even if you never signed a written employment contract.
In Ontario, many employees work without a formal written agreement. That does not mean the employer can let them go with nothing. If you are a non-unionized employee and your employer terminates your employment without cause, you may be entitled to compensation under the Employment Standards Act, 2000, and potentially much more under common law.
Vanguard Law’s wrongful dismissal page explains that the ESA sets minimum entitlements, while common law reasonable notice can be higher depending on factors such as length of service, position, age, and the job market.
No Written Contract Does Not Mean No Contract
Even if you never signed a formal document, you still had an employment relationship. The terms may come from:
Verbal promises
Emails or offer letters
Pay practices
Bonus or commission plans
Workplace policies
Job duties and reporting structure
The way the parties actually behaved over time
The key issue is whether there is an enforceable written termination clause that limits what the employee receives when the job ends.
If there is no written contract, or no enforceable termination clause, the employee may be entitled to common law reasonable notice instead of only ESA minimums.
ESA Minimums vs. Common Law Severance
Employees often use the word “severance” to mean any money paid after losing a job. Legally, there are different categories.
1. ESA Termination Pay
Ontario’s ESA requires employers to provide minimum notice of termination or termination pay in lieu of notice for eligible employees. The Ontario ESA Policy and Interpretation Manual states that Part XV notice provisions are meant to ensure employees receive a minimum amount of advance warning of termination, or pay in lieu, so they can make new work arrangements. It also says employees are generally eligible for termination notice or pay after three months of continuous employment.
2. ESA Severance Pay
ESA severance pay is different from termination pay. Ontario’s official guide explains that severance pay compensates qualifying employees for losses such as loss of seniority when a long-term employee loses their job, and it is not the same as termination pay.
To qualify for statutory severance pay, an employee must generally have worked for the employer for five or more years, and the employer must either have a global payroll of at least $2.5 million or have severed 50 or more employees in a six-month period because all or part of the business permanently closed. The ESA maximum statutory severance pay is 26 weeks.
3. Common Law Reasonable Notice
Common law notice is often where employees without written contracts may have significant additional rights.
The Ontario government itself notes that ESA termination and severance rules are minimum requirements, and some employees may have greater rights under common law or other legislation.
That means the employer’s first offer may not be the full amount owed.
Why Having No Employment Contract Can Matter
A written employment contract often contains a termination clause. Employers may use that clause to try to limit severance to ESA minimums.
But if you never signed a contract, the employer may have no written clause limiting your rights. In that situation, common law reasonable notice may apply.
That can make a major difference.
For example, an employer might offer only a few weeks of ESA termination pay. But without an enforceable contract, a long-service employee, older employee, specialized employee, manager, or employee facing a difficult job market may be entitled to a longer common law notice period.
Vanguard Law’s severance package review page explains that the firm assesses ESA and potential common law entitlements side by side, including strategy, negotiation, and finalizing written settlement terms.
How Is Severance Calculated Without an Employment Contract?
There is no simple one-week-per-year rule for common law severance.
Courts consider the facts of the employee’s situation. The leading approach comes from Bardal v. Globe & Mail Ltd., which identified several factors used to assess reasonable notice:
Character of employment
Length of service
Employee’s age
Availability of similar employment
CanLII Connects summarizes Bardal as one of the foundational cases in employment law and notes that these factors continue to guide courts in wrongful dismissal cases.
The Supreme Court of Canada also refers to the individualized nature of reasonable notice in employment law decisions such as Honda Canada Inc. v. Keays.
What Can Be Included in Severance?
A proper severance review should look at more than base salary.
Depending on the facts, severance may include:
Base salary
Benefits continuation
Vacation pay
Bonus entitlement
Commissions
Car allowance
Pension or RRSP contributions
Stock options, RSUs, or equity compensation
Outplacement support
Reference language
Release wording
Payment structure and tax treatment
This is why a severance offer should not be reviewed only by looking at the number of weeks or months offered.
What If I Only Signed an Offer Letter?
An offer letter can still be an employment contract.
Even if you did not sign a long-form agreement, your employer may argue that an email, offer letter, or onboarding document contains binding terms. The details matter.
Employees should check whether the offer letter includes:
A termination clause
A probation clause
A layoff clause
Bonus or commission language
Policy handbook incorporation
“Entire agreement” wording
A clause allowing the employer to change duties, pay, hours, or location
If the document contains a termination clause, the next question is whether the clause is enforceable. Vanguard Law’s article on CIBC’s termination clause explains that defective termination language may allow employees to pursue common law reasonable notice instead of the contractual limit.
What If My Employer Says I Am Only Owed ESA Minimums?
Do not assume that is correct.
ESA minimums are the legal floor, not always the full amount owed. If there is no enforceable employment contract limiting your rights, you may have a common law claim for additional notice or pay in lieu.
This is especially important for employees who are:
Long-service employees
Older workers
Managers, executives, or professionals
Specialized technical employees
Employees with compensation beyond salary
Employees recruited from secure employment
Employees in a difficult job market
Employees terminated shortly after a promotion or relocation
A short ESA-only offer may be significantly below what the employee can claim.
What If I Was Temporarily Laid Off and Have No Contract?
If there is no written contract allowing temporary layoffs, a layoff may create legal risk for the employer.
Ontario’s ESA has rules about when a layoff becomes a termination. The Ontario ESA Policy and Interpretation Manual states that termination can occur where an employer lays an employee off for longer than the period of a temporary layoff.
Separately, at common law, if the employer does not have a contractual right to lay you off, a temporary layoff may be treated as a constructive dismissal. Vanguard Law’s constructive dismissal page explains that constructive dismissal can happen where an employer makes a fundamental unilateral change to employment terms or creates an intolerable work environment.
Should I Sign the Severance Offer?
Not before getting advice.
Once you sign a release, you may give up your right to claim additional compensation. This is especially risky where:
You never signed an employment contract
You are being offered only ESA minimums
The offer excludes bonuses, commissions, or benefits
The employer imposes a short deadline
You are asked to confirm resignation
The employer says the offer is “standard”
You are unsure whether there was just cause
You were laid off before being terminated
Vanguard Law’s severance package review page specifically advises employees not to sign by the deadline before understanding the consequences.
What Should I Do If I Was Fired Without a Contract?
Take these steps:
Ask for the termination letter and severance offer in writing
Do not sign a release immediately
Save your offer letter, emails, pay stubs, bonus plans, commission plans, and handbook
Ask whether the offer is based on ESA minimums or common law notice
Confirm whether benefits continue
Confirm whether bonuses, commissions, vacation pay, and expenses are included
Apply for Employment Insurance promptly
Speak with an Ontario employment lawyer before accepting
The Government of Canada explains that severance pay may be offered as part of a severance package, severance agreement, or retiring allowance, and that employees should consider how the payment is structured. Government of Canada – Understanding your severance pay.
Speak With an Ontario Severance Lawyer Before You Sign
If you were terminated and never signed an employment contract, you may be entitled to more than your employer is offering.
At Vanguard Law, we review severance packages, assess whether there is an enforceable contract, compare ESA minimums against common law entitlements, and help employees negotiate fair compensation.
Before signing anything, speak with Vanguard Law.
Contact Vanguard Law today for a severance package review.
FAQ Section
Do I get severance if I never signed an employment contract?
Yes, you may still be entitled to termination pay, statutory severance pay, and potentially common law reasonable notice. The absence of a written contract may actually help if there is no enforceable clause limiting your rights.
Is my employer allowed to offer only ESA minimums?
An employer can make an ESA-only offer, but that does not mean it is the full amount owed. ESA minimums are the floor. Many non-unionized employees may be entitled to additional common law compensation.
How much severance do I get without a contract?
It depends on your age, length of service, role, compensation, and the availability of similar work. There is no automatic one-week-per-year rule for common law reasonable notice.
What if I signed an offer letter but not a full contract?
An offer letter may still be a contract. It should be reviewed to determine whether it contains a termination clause and whether that clause is enforceable.
Can I negotiate severance if I have no employment contract?
Yes. If there is no enforceable written termination clause, you may have leverage to negotiate a better severance package based on common law reasonable notice.
Should I sign the severance offer by the employer’s deadline?
Not before understanding your rights. It is common to ask for more time and get legal advice before signing a release.