What Happens to Your Rights if Your Employer Shuts Down in Ontario?
When a company closes its doors, employees are often left wondering: What happens to my pay, benefits, and severance?
In Ontario, the answer depends on how the closure happens. If your employer simply winds down operations, you may be entitled to termination pay, severance pay, or both. If the company is sold and continues under new ownership, your job may carry over. And if the business goes into bankruptcy or receivership, you may be able to claim unpaid wages and benefits through the federal Wage Earner Protection Program (WEPP).
Termination vs. Severance Pay
Termination pay is in place of notice if your employer does not give advance warning of the shutdown.
Severance pay is an additional entitlement for longer-service employees when certain criteria are met (such as large payrolls or mass terminations).
These payments are minimum standards under the Employment Standards Act, 2000. In many cases, employees are owed more at common law—especially if factors like age, role, and job market conditions make re-employment difficult.
Why Legal Advice Matters
Severance packages are not “one size fits all.” Comparing your package to a coworker’s may be misleading. A lawyer can review your situation, explain whether your offer is fair, and negotiate improvements.
Key Takeaway
If your employer shuts down, don’t assume the first offer is the final word. Get advice before signing—your future income may depend on it.
