Severance pay in Alberta: A guide for HR leaders

An Alberta employer who lets employees go without cause will face the question of how much severance they owe, along with the legal implications of that decision under provincial rules. The answer has three parts, covering the obligations that come with job terminations, and most severance pay mistakes in Alberta happen when employers treat those three parts as one.

This article gives Albertan employers valuable information about severance pay, including what the law requires, how to calculate it with real numbers, when the money is due, and how to handle awkward cases.

Ending someone’s employment without cause in Alberta involves three separate obligations. They overlap, but they come from different places and are calculated differently.

Alberta’s Employment Standards Code sets a floor. Employees with more than 90 days of service are entitled to written notice, termination pay, or a combination of both, based on how long they’ve worked for you. This is the only amount the Code requires, and it’s what the government means by termination pay in Alberta.

Unless a valid employment contract says otherwise, non-unionized employees in Alberta have an implied right to reasonable notice of termination. Courts set this amount case by case, based on elements such as the employee’s age, length of service, type of role, and how easy it will be to find comparable work. It’s almost always longer than the Code minimum, and it’s where most of an employer’s legal exposure sits.

Many employers miss this crucial point: the Code doesn’t require severance. This is a contract or common law term. The Government of Alberta states that severance pay is determined under common law and isn’t required under the Employment Standards Code. In everyday use, “severance” in Alberta means whatever an employer pays above the statutory minimum, either because an employment contract promises it or because common law requires it.

Under the Code, no, severance pay in Alberta is not mandatory. The statutory obligation is termination notice or termination pay, and nothing more. That differs from Ontario, which adds statutory severance for employees with five or more years of service at larger employers. If your organization operates in both provinces, don’t carry Ontario’s five-year rule into your Alberta process.

In practice, though, severance pay in Alberta is often mandatory. Common law reasonable notice applies to most non-unionized employees, unless their contract has a clear, enforceable termination clause limiting them to the Code minimum. Clauses that are vague, or that could pay less than the Code in any scenario, are regularly challenged – and a clause that fails reopens the door to full common law notice. If you plan to rely on a contract to cap what you owe, have counsel review it before termination day.

The Code also lists situations where no notice or termination pay is required. The most common are employees dismissed for just cause, employees with 90 days’ service or less, seasonal employees whose season has ended, employees hired for a definite term or a specific task of 12 months or less, and employees who don’t return within seven days of a written recall from a temporary layoff.

The Code minimum depends only on length of service:

LENGTH OF EMPLOYMENT	NOTICE OR TERMINATION PAY REQUIRED
More than 90 days, less than 2 years	1 week
2 years, less than 4 years	2 weeks
4 years, less than 6 years	4 weeks
6 years, less than 8 years	5 weeks
8 years, less than 10 years	6 weeks
10 years or more	8 weeks

A few Alberta severance pay rules apply during the notice period itself:

• Notice must be in writing and include a termination date that matches the correct notice period.
• You can’t reduce the employee’s wages or other terms of employment while they work out their notice.
• You can’t make them use up vacation or banked overtime during notice, unless you’d already directed the vacation in writing or they agreed to use banked overtime in writing.

Termination pay must equal at least what the employee would have earned working their regular hours during the notice period. For salaried staff, that’s simply their weekly wage multiplied by the weeks owed.

For employees whose pay varies, the Code uses an average of the last 13 weeks the employee actually worked before the termination date. Those weeks don’t need to be consecutive. The calculation excludes overtime pay, general holiday pay, vacation pay, and other earnings that aren’t wages for regular hours.

A marketing coordinator earns $62,400 a year and has worked for you for one year and six months:

• Weekly wage: $62,400 ÷ 52 = $1,200
• Code entitlement: 1 week
• Termination pay if no working notice is given: $1,200

A warehouse lead is paid hourly, and their regular hours change from week to week. Their wages for regular hours across the last 13 weeks worked add up to $16,120. Overtime from those weeks is excluded:

• Average weekly wage: $16,120 ÷ 13 = $1,240
• Code entitlement: 4 weeks
• Termination pay if no working notice is given: $1,240 × 4 = $4,960
  

This employee crossed the four-year line three months ago. At three years and 11 months, the Code entitlement would have been two weeks, or $2,480.

An operations manager earns $98,800 a year and has 12 years of service:

• Weekly wage: $98,800 ÷ 52 = $1,900
• Code entitlement: 8 weeks
• Termination pay if no working notice is given: $1,900 × 8 = $15,200
• If they work three weeks of notice: $1,900 × 5 = $9,500 in termination pay for the remaining five weeks

Alberta lets you meet the Code minimum in three ways: working notice, pay in lieu of notice, or a mix of the two. Working notice keeps the employee on the job until the termination date, while pay in lieu ends employment right away and pays out the notice period.

A combination, like Example 3 above, lets the employee work part of the period and receive pay for the rest. However, if an employee keeps working past the termination date on their notice, that notice is no longer valid, and you’ll need to issue a new one.

Under the Code, final earnings, including termination pay, are due within whichever of these two deadlines the employer chooses:

• 10 consecutive days after the end of the pay period in which employment ended, or
• 31 consecutive days after the employee’s last day of employment.
  

Say an employee’s last day is Friday, November 13, 2026, and that pay period ends on November 20. Under the first option, final pay is due by November 30. Under the second, it’s due by December 14.

Final earnings cover more than termination pay. Under Alberta’s payment of earnings rules, they also include regular wages, overtime pay (including banked overtime), earned but unpaid vacation pay, and general holiday pay (including banked holidays).

Anything you pay above the Code minimum is due on the terms of the severance agreement you reach with the employee. Keep the two separate: the statutory amount is owed whether or not the employee signs a release, so don’t make it conditional on one. Employees can file an employment standards complaint within six months of their last day of work.

Tables and formulas cover most terminations, but there are specific situations where Alberta employers most often get caught out. Let’s examine three of the most common.

In Alberta, a temporary layoff can last up to 90 days in any 120-day period. It needs written notice before it starts, and that notice must include a copy of sections 62 to 64 of the Code. If the employee hasn’t returned to work by day 91, their employment is considered terminated, and termination pay is owed if they’re entitled to it.

If you decide before day 91 that the employee won’t be coming back, you can end their employment but you’ll need to provide termination pay. Because the employee isn’t working, you can’t give working notice. A layoff can also be extended if you keep making regular payments, such as wages or benefit contributions, and the employee agrees. Termination pay becomes payable when those payments stop.

Courts have also found that laying off an employee without a contract or collective agreement that allows it can amount to constructive dismissal.

If you rehire someone after a break of less than 90 days, the Code treats their employment as continuous and uses their original hire date. Time on job-protected leave also counts as continuous employment, and so does service with a previous owner if the business changes hands and the employee stays on.

That affects the calculation: an employee who first joined you six years ago, left, and came back 75 days later is entitled to five weeks, not one.

The Code entitlement steps up at two, four, six, eight, and 10 years of service. The biggest jump is at four years, where the minimum doubles from two weeks to four. There is no statutory step at five years’ in Alberta.

It can be tempting to time a termination just before a threshold, but courts don’t calculate reasonable notice in steps, and a termination timed to save a few weeks of pay invites closer scrutiny. Long-tenured employees deserve particular care, because they’re often the people who struggle most to land a new role.

If you intend to lay off 50 or more employees at one location within a four-week period, you must give the Minister written notice at least four weeks before the first termination takes effect. When that isn’t possible, give notice as soon as reasonably possible.

Group notice doesn’t replace individual notice. Every affected employee still needs their own written notice or termination pay, calculated on their individual service. Temporary layoffs don’t trigger group rules unless they end in termination. For the wider picture, explore our guide for layoffs in Canada.

So, what is typical severance pay in Alberta? There’s no single figure, and any rule of thumb is a guess. The Code minimum in the table above is fixed. Everything beyond it depends on the employment contract and, where no enforceable clause exists, on what a court would consider reasonable notice for that specific employee.

Employers can still control the process. A clear termination policy, well-drafted contracts, and consistent calculations keep disputes to a minimum. When it’s time to build the offer, design a severance package that reflects a fair exit, including career transition support with a people-first outplacement provider.

Careerminds helps Alberta employers handle terminations with care, with outplacement services and career transition support that starts on notification day. Talk to our experts to see how we can support your organization.