One of the most expensive assumptions I see Alberta employers make is believing severance is a calculation.
It’s a risk assessment. Those are two very different things, and the gap between them is where wrongful dismissal claims are built.
When employers call us about a termination, the first question is almost always the same: “What do we owe?” It’s a reasonable question. The problem is where most people go looking for the answer: open the Employment Standards Code, look up years of service, match it to a notice period. One week, two weeks, four weeks, eight weeks: simple.
Except it isn’t. The number in the Code is often just the starting point of the conversation. At Daeco HR Consulting, the most preventable exposure we see comes from the same place every time: an employer who paid the Employment Standards minimum, believed the matter was fully resolved, and received a demand letter a few weeks later.
Termination Pay Under Alberta’s Employment Standards Code
The Employment Standards Code requires employers to provide either written notice of termination or pay in lieu of notice, commonly called termination pay. The amount is based on continuous length of service. Employees with less than 90 days of service are not entitled to statutory notice. From 90 days to under two years, one week is required. From two to under four years, two weeks. From four to under six years, four weeks. From six to under eight years, five weeks. From eight to under ten years, six weeks. Employees with ten or more years of continuous service are entitled to eight weeks of notice or pay in lieu.
These are statutory minimums. A contract that provides less than the Code is unenforceable to that extent, regardless of what the employee signed. There is also a group termination provision that applies when 50 or more employees are terminated within a four-week period. Most small and mid-sized employers will never encounter it, but it matters if you’re restructuring.
Here’s where employers get into trouble.
I can’t tell you how many times I’ve spoken with employers who believed they handled a termination properly. They paid what Employment Standards required. They prepared a reference letter. They treated the employee respectfully and wished them well. Then a few weeks later, a demand letter arrived, asking for months of pay instead of weeks.
“But we paid them everything they were entitled to.”
Maybe they did. More often, what they actually mean is “we paid the Employment Standards minimum,” and those are not the same thing.
Common Law Severance in Alberta: Why the Numbers Are Often Higher
One of the biggest misconceptions in Alberta is that employment standards and severance are interchangeable concepts. They aren’t. Employment Standards establishes the minimum an employer must provide. The common law, a separate entitlement to reasonable notice built through decades of court decisions, often requires considerably more. The gap between those two numbers is where most termination disputes live.
Business owners want a formula here. I understand that. I like formulas too; they’re predictable. Common law severance doesn’t work that way. Courts assess reasonable notice using the factors from Bardal v. Globe and Mail: the employee’s age, their length of service, the character of the employment, and the availability of comparable work in the market. Inducement matters too, especially where an employer persuaded someone to leave stable employment to join the organization.
A 25-year-old employee with two years of service is in a very different position than a 58-year-old manager with 15 years in a specialized field. Yet I still see employers applying the same logic to both, because they’re looking for a rule. What they actually need is an assessment. Courts have awarded reasonable notice ranging from a few months to upward of 24 months for long-tenured senior employees, and in those cases the statutory minimum is a small fraction of the full entitlement.
Pay only the minimum, present it as full and final severance, and ask for a signed release, and you may not be discharging the full legal obligation. If the termination is later challenged, you can be ordered to pay the difference between what was paid and what a court determines was reasonable, plus the employee’s legal costs in many cases.
Why Employers Get Caught Off Guard
I understand why this happens. Most business owners aren’t lawyers, and they’re not HR professionals. They’re running businesses, serving customers, and putting out fires all day long.
Then a termination comes up. Someone searches online, someone asks payroll, someone remembers how it was handled five years ago, and a decision gets made. The problem is that terminations are one of the highest-risk decisions an employer will make, and also one of the least frequent. Most leaders never get enough repetition to become good at them. So they rely on assumptions, and assumptions get expensive very quickly in the world of severance.
The wrong question is “what’s the minimum we can pay?”
The better question is “what is our exposure?”
Those questions lead to completely different conversations. The first focuses on cost. The second focuses on risk, and if you’ve been in business long enough, you know those aren’t always the same thing. Sometimes paying a little more up front significantly reduces the likelihood of a dispute later. You’re evaluating risk, not processing a payroll entry.
How Severance Packages Are Calculated in Alberta
A complete severance package in Alberta typically addresses three components: statutory termination pay under the Employment Standards Code, any earned but unused vacation pay (owed regardless of how the employment ended), and the common law component, which reflects your assessment of what a court would likely award this specific employee.
That third component is where the calculation becomes judgment rather than arithmetic. Advanced age, long tenure, a senior or specialized role, a thin local market for the employee’s skills, and inducement at the time of hire all push the entitlement up. Short service and a strong market for the employee’s skills can bring it down.
This is why severance determination benefits from HR expertise alongside legal counsel. The legal question is what a court might award. The HR question is how to structure and document the termination so the package holds up, and so a challenge never starts.
Documentation Decides Your Exposure
Here’s something that surprises a lot of people: even when a termination is without cause, documentation still matters. A lot.
I’ve seen organizations with excellent documentation navigate difficult situations relatively smoothly. I’ve also seen organizations with almost no documentation defending decisions they could barely explain six months later.
Good documentation demonstrates professionalism. It demonstrates consistency. And perhaps most importantly, it demonstrates that the organization didn’t suddenly make a decision in a vacuum. When records are weak, everything becomes harder: the termination meeting, the severance discussion, the negotiation, and the defence of the decision itself.
Conduct during the process carries its own risk too. Inadequate notice, misrepresenting the nature of the termination, or failing to provide required documentation can expose the organization to damages beyond reasonable notice, including bad faith and human rights claims.
The Best Terminations Are Planned Long Before They Happen
That statement sounds strange, but it’s true. The organizations that navigate terminations most effectively aren’t necessarily the ones with the best lawyers. They’re the ones with clear employment agreements, consistent documentation, strong performance management practices, and leaders who have been trained for hard conversations. By the time a termination occurs, much of the work has already been done.
Most employers focus on the severance payment itself. That’s understandable; it’s the visible cost. What they miss are the invisible ones: management time, stress, legal fees, disruption to the team, and the energy that gets pulled away from running the business and redirected into managing conflict. I’ve watched owners spend months dealing with disputes that could have been substantially reduced if the process had been handled differently from the beginning. The frustrating part is that most of them weren’t trying to do anything wrong. They just didn’t understand the full picture.
Daeco’s termination support covers that full process for Edmonton and Alberta employers: reviewing the circumstances and the applicable exposure, calculating the appropriate package under both the Employment Standards Code and common law, preparing the required documentation, and coaching the leadership team through the termination meeting itself. HR should be the first call, not the last.
Frequently Asked Questions
What is the difference between termination pay and severance pay in Alberta?
In everyday usage the terms overlap, but under Alberta’s Employment Standards Code the technical term is “termination pay,” meaning the statutory minimum based on years of service. “Severance” in a legal context usually refers to common law reasonable notice, which is separate and typically higher. A complete severance package should address both.
How is severance calculated in Alberta?
Statutory termination pay is based on continuous length of service, ranging from one week (90 days to two years) to eight weeks (ten or more years). Common law severance has no fixed formula. It is assessed on the employee’s age, tenure, role, and the availability of comparable employment. Both components should be factored into any severance package.
Can an employee refuse a severance package in Alberta?
Yes. An employee is not required to accept a severance offer. If they believe it falls short of their common law entitlement, they may negotiate or pursue a claim through the courts or Alberta Employment Standards. Packages structured with HR and legal support are challenged far less often.
Does severance pay affect Employment Insurance in Alberta?
Yes. Severance pay, termination pay, and pay in lieu of notice affect the timing of EI eligibility. An employee cannot receive EI benefits for the period covered by the severance or notice payment. Employees should confirm specifics with Service Canada.
A Note from the Founder
I’ve sat in termination meetings with employers who believed they had done everything right: paid what they thought they owed, prepared a clean reference letter, and handled the conversation with care. What they hadn’t done was look at the common law picture, and weeks later a demand letter arrived. The gap between what was paid and what was being claimed was significant, and almost entirely preventable. If you had to terminate a long-service employee tomorrow, would you actually know how to assess your organization’s exposure? That’s the difference between managing a termination and simply processing one.
— Elizabeth Disman, Founder, Daeco HR Consulting
If you have a termination coming up, or want to review how your organization currently approaches severance, book a Termination Strategy Session with Daeco HR Consulting. We support employers across Edmonton, Alberta, and Western Canada through the full process, from initial review to final documentation.