A single word, several meanings When an employer writes a termination letter, the word severance often gets used as a catch all term for whatever money is being paid out. In everyday conversation that habit causes no harm. In a termination letter it can create a real problem, because severance does not mean the same thing in every Canadian jurisdiction, and in some jurisdictions it means something legally specific that has nothing to do with what the employer intended to say. Ontario is the clearest example. Under the Employment Standards Act, termination pay and severance pay are two separate concepts with separate qualifying rules. Termination pay is tied to how much notice of termination an employee is entitled to receive. Severance pay is a distinct entitlement that depends on factors such as the employer's payroll and the employee's length of service, and it does not automatically apply just because a termination has happened. An employee can be entitled to termination pay without qualifying for statutory severance pay at all.
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