When employment ends in Alberta, you may be owed far more than just a few weeks’ pay. Most employees are entitled to up to 24 months’ pay – but you need to understand the difference between termination pay and severance pay to know your full rights.
While these terms are often used interchangeably, they serve distinct purposes under Alberta law. And both are minimums under the Employment Standards Code (ESC) – your actual common law rights can be significantly higher.
For a deeper dive into each type of compensation in Alberta, visit our pages on termination pay and severance pay.
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What is Termination Pay?
Termination pay is compensation provided when an employer ends an employment relationship without sufficient notice. Instead of providing a notice period, the employer pays out a lump sum equivalent to what the employee would have earned during that time.
- Eligibility: Employees with at least 90 days of continuous service are entitled to termination pay if no working notice is given.
- Calculation: Based on length of employment, up to 8 weeks under the ESC.
For more details, visit our Alberta Termination Pay page.
What is Severance Pay?
Severance pay is money your employer owes you when your job is permanently ended. It’s meant to recognize your years of service and the impact of losing your job.
- Purpose: Compensates long-serving employees for the loss of employment.
- Consideration: Your rights may be affected by a termination clause in your employment contract.
Under common law, which is separate from the ESC, almost every non-unionized employee in Alberta is entitled to significantly more. Common law severance is based on factors like your age, position, length of service, and ability to find new work. You don’t need to meet any special eligiblity rules (like payroll size, or size of the company’s layoff) to qualify for it.
The full amount can be up to 24 months’ pay – a difference that could be worth tens of thousands of dollars more than what your employer first offers.
For more information, see our Severance Pay Alberta page.
Is Severance Pay the Same as Termination Pay?
No, termination pay and severance pay are not the same. Both can be part of what’s commonly referred to as a “severance package,” but they each have unique criteria and serve separate purposes under Alberta’s Employment Standards Code (ESC).
- Termination pay covers the notice period if you’re let go without warning.
- Severance pay compensates for long-term service and the financial impact of job loss.
