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Pay in Lieu of Notice Ontario Calculator

Reviewed by Calculator Editorial Team

When an employee is terminated without proper notice, they may be entitled to pay in lieu of notice (PILON) under the Ontario Employment Standards Act (ESA). This calculator helps you determine how much PILON you're owed based on your employment details.

What is Pay in Lieu of Notice?

Pay in lieu of notice (PILON) is compensation an employee receives when they are terminated without the required notice period. Under the Ontario ESA, employees are entitled to a minimum of two weeks' notice for each year of service, up to a maximum of eight weeks.

Key Point: PILON is calculated based on the employee's regular wages and the number of weeks' notice they would have been entitled to.

The purpose of PILON is to provide fair compensation for the loss of future earnings that would have been earned during the notice period. It's important to note that PILON is in addition to any other severance pay that might be owed.

How to Calculate Pay in Lieu of Notice

The calculation for PILON in Ontario follows these steps:

PILON = (Regular Weekly Wage × Number of Notice Weeks)

Where:

  • Regular Weekly Wage is the employee's average weekly earnings
  • Number of Notice Weeks is determined by years of service (minimum 2 weeks, maximum 8 weeks)

The number of notice weeks is calculated as follows:

Years of Service Notice Weeks
Less than 1 year 2 weeks
1 year or more 2 weeks + 1 week for each additional year (up to 8 weeks)

Ontario-Specific Considerations

In Ontario, the ESA requires employers to provide PILON when an employee is terminated without proper notice. The calculation is straightforward but there are some important considerations:

Payment Timing

PILON must be paid within 30 days of termination. It should be paid in a lump sum or through the regular payroll system.

Record Keeping

Employers must keep records of all PILON payments for at least four years, as required by the ESA.

Important: PILON is different from severance pay. Severance pay is typically paid for reasons other than termination without notice, such as redundancy or company restructuring.

Example Calculation

Let's look at an example to illustrate how PILON is calculated in Ontario.

Scenario

An employee has worked for 3 years and 6 months at a company. Their regular weekly wage is $1,200. They are terminated without proper notice.

Calculation Steps

  1. Determine years of service: 3 years and 6 months counts as 3 full years
  2. Calculate notice weeks: 2 weeks + 1 week for each year of service (up to 8 weeks)
    • 3 years × 1 week = 3 weeks
    • Total notice weeks = 2 + 3 = 5 weeks
  3. Calculate PILON: $1,200 × 5 weeks = $6,000

Result

$6,000

This employee would be entitled to $6,000 in PILON for being terminated without proper notice.

FAQ

How is PILON different from severance pay?

PILON is specifically for employees terminated without proper notice, while severance pay is typically paid for reasons other than termination without notice, such as redundancy or company restructuring.

When must PILON be paid?

PILON must be paid within 30 days of termination. It should be paid in a lump sum or through the regular payroll system.

How is the number of notice weeks determined?

The number of notice weeks is based on years of service: 2 weeks for less than 1 year, plus 1 week for each additional year (up to a maximum of 8 weeks).

Do I need to provide proof of years of service?

Yes, you should keep records of your employment dates to verify your years of service when calculating PILON.