One week’s pay per completed year, capped at 26 weeks — but the trigger has two independent routes, and pension-credited service has to come out of the calculation for anyone already drawing an unreduced pension.
Short answer
ESA s.64(1) owes severance to an employee with five or more years’ service where either “the employer has a payroll of $2.5 million or more” or the severance results from a permanent discontinuance of the business and the employee is one of “50 or more employees who have their employment relationship severed within a six-month period.” The two limbs are independent — a target with a payroll well under $2.5 million can still owe severance the moment a post-closing shutdown crosses fifty severances, and a reserve modelled only on the payroll test can be wrong by the entire amount.
The five-year requirement sits above both limbs and governs each of them. The fifty in limb (a) is a headcount trigger counted across everyone severed as a result of the discontinuance; the entitlement itself is paid only to those of them with five years or more of service. Treating the fifty as the paid population overstates the bill; treating limb (a) as subject to the $2.5 million payroll test understates it to nil.
ESA s.65(2.1) removes pension-credited service from both the eligibility test and the calculation for “an employee in receipt of an actuarially unreduced pension benefit,” severed on or after November 6, 2009. The gate is actual receipt, not mere plan membership, and the exclusion bites on eligibility as well as arithmetic — it can take a long-service employee below the five-year floor and reduce the entitlement to nil, not merely to a smaller number. A severance model that takes credited service from the payroll hire date rather than from the plan administrator’s own records will not catch this, in either direction.
The payroll-versus-headcount trap decided fifty-one severed in six months at a small payroll. The pension double-count is the subject of a severance reserve that double-counted pension service.
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