What are Severance Benefits in North America?

North American countries (USA, Canada, Mexico) have different systems for termination benefits. Gratuity as known in other regions doesn't exist, but severance pay may be offered.

In the USA and Canada, severance pay is generally not mandatory but may be offered by employers. Mexico has mandatory severance pay requirements.

Our calculator helps you understand these benefits for North American countries.

How Severance Benefits Work in North America

USUSA Severance

No federal requirement (FLSA). Industry standard: 1–2 weeks pay per year of service when offered. Only New Jersey mandates severance for mass layoffs. Severance is taxable (22% federal + state).

Minimum service: 0 year

CACanada Termination Pay

Termination pay varies by province. Generally 1-2 weeks per year of service, subject to provincial employment standards.

Minimum service: 0 year

MXMexico Severance

Mandatory for unjustified dismissal: 90 days SDI + 20 days/year + seniority premium (12 days/year, capped) + finiquito. Federal Labor Law Articles 47–51.

Minimum service: 0 year

Tips & Best Practices

📋 Check Employment Contract

Review your employment contract and company policies for severance pay terms.

💰 Understand State/Provincial Laws

Laws vary by state (USA) and province (Canada). Check local employment standards.

Negotiate Severance

In USA and Canada, severance can often be negotiated. Understand your entitlements.

Why Use Our Calculator?

Multi-Country Support

Calculate benefits for USA, Canada, and Mexico with their specific regulations.

Frequently Asked Questions

No. The FLSA does not require severance pay. It is voluntary unless promised in a contract or policy. New Jersey is the only state that mandates severance for mass layoffs.
For unjustified dismissal: 90 days of Daily Integrated Salary + 20 days per year of service + seniority premium (12 days/year, capped at 2× minimum wage) + finiquito. Federal Labor Law Articles 48, 50.