# ESA Severance Pay and the ROE vs TFR in Italy: End-of-Employment Payments Compared

> Ontario ESA severance (5 years, $2.5M payroll, 26-week cap), federal severance and the ROE vs Italian TFR, NASpI ticket and collective dismissal.

In Canada, an end-of-employment payment depends on the reason, the length of service and the size of the employer. In Italy, the main one, **TFR**, is owed on every exit from day one. And where a Canadian employer issues a **Record of Employment (ROE)** so the employee can claim EI, the Italian employer pays a contribution toward unemployment benefit when it dismisses. Full comparison on [Italy vs Canada](/italy-vs-canada.html).

## Canada: severance pay under the ESA and the Code

**Ontario ESA severance pay** is separate from termination notice. An employee qualifies when:

- they have at least **five years** of employment (all time counts, continuous or not), and
- the employer has a global payroll of at least **$2.5 million**, or severed 50 or more employees within six months because all or part of the business permanently closed.

The amount is regular weekly wages × (completed years + completed months ÷ 12), capped at **26 weeks**. Example from the Ontario guide: $1,000 a week with 7 years and 9 months gives $7,750.

**Canada Labour Code severance** applies to federally regulated employees with **12 months'** continuous employment who are terminated: the greater of **2 days' wages per completed year** or **5 days' wages**. It is not owed on resignation, on dismissal for just cause or at the stated end of a fixed term.

Many employees resign without receiving anything beyond vacation pay owed. Smaller Ontario employers below the payroll threshold owe no ESA severance at all.

## Canada: the Record of Employment

Whenever an employee has an **interruption of earnings**, the employer must issue an ROE to Service Canada, whether or not the employee plans to claim EI. Electronic ROEs are due within 5 calendar days after the end of the pay period in which the interruption occurs (for monthly pay, the earlier of that date or 15 days after the interruption). The ROE is how EI knows the employee's insurable earnings.

## Italy: TFR on every exit

**TFR** (trattamento di fine rapporto, art. 2120 Civil Code) works like this:

- **Every employee** accrues it from day one, permanent or fixed-term.
- Each year the employer sets aside annual pay ÷ 13.5 (about 7.41%), less a 0.5% contribution to INPS, so roughly **6.91%** of pay.
- The accumulated fund is revalued each year at **1.5% plus 75% of ISTAT inflation**.
- It is paid when employment ends **for any reason**, including resignation.
- The employee can direct future accruals to a supplementary pension fund; larger employers (50+ employees) transfer retained TFR to an INPS treasury fund.

Example: a RAL of €60,000 accrues about €4,150 of TFR a year.

## Italy: the NASpI ticket and collective dismissal

Italy has no ROE, but dismissed employees claim **NASpI** unemployment benefit from INPS, and the employer pays a **dismissal contribution** (the "ticket", Law 92/2012) of about **€649.73 per year of service in 2026, up to about €1,949**. It applies to dismissals and some mutual terminations, not to ordinary resignations. In **collective dismissals** without union agreement it is tripled.

A **collective dismissal** (Law 223/1991) applies to employers with more than 15 employees making at least five redundancies within 120 days in a province. It requires a union consultation procedure and objective selection criteria. It is more procedural than Ontario's mass-termination notice.

## Side by side

| Topic | Canada (Ontario / federal) | Italy |
|---|---|---|
| Main exit payment | ESA severance: 5 yrs, $2.5M payroll | TFR: always, from day one |
| Formula | 1 week per year, max 26 weeks | Annual pay ÷ 13.5 less 0.5% |
| On resignation | No severance | TFR paid |
| Federal | Max(2 days/yr, 5 days) after 12 months | Not applicable |
| Unemployment paperwork | ROE to Service Canada | UniLav + NASpI ticket |
| Mass/collective | 8–16 weeks' notice (50+) | Union procedure (5+ in 120 days) |

## Budgeting

A Canadian finance team usually treats severance as a contingent cost. In Italy, TFR is a certain cost: budget about 7% of pay every year. The contingent items are notice, the NASpI ticket and, if challenged, Jobs Act compensation (see [reasonable notice vs Italian dismissal](/articles/canada-reasonable-notice-vs-italian-dismissal-rules.html)).

## Common questions from Canadian employers

**Does TFR replace notice?** No. Notice (or pay in lieu) is owed on top.

**Is TFR taxed like a severance payment?** It is subject to separate taxation in Italy at an average rate based on past income, withheld by the employer.

**What does the employee get in the final payslip?** Salary to the last day, accrued untaken leave and ROL, pro-rata 13th (and 14th) month, notice pay if applicable and TFR.

**Does an employee who leaves after six months get anything?** In Ontario, typically only accrued vacation pay and any notice owed. In Italy, the employee receives six months of TFR accrual, accrued leave and the pro-rata 13th month, whether they resign or are dismissed.

**Is there a waiting period like the ESA's five years?** No. TFR has no qualifying period and no cap.

## A worked comparison

An employee earning $1,500 a week in Ontario, with 6 years and 6 months of service at a company with global payroll above $2.5 million, is terminated without cause. ESA notice is 6 weeks and ESA severance is 6.5 weeks, so $18,750 in statutory entitlements, plus any common-law notice the contract does not exclude.

An Italian employee on a RAL of €70,000 with the same service, whose role is eliminated, receives CCNL notice (or pay in lieu), about €31,000 of accumulated TFR before revaluation, and the employer pays a NASpI ticket of about €1,949. Most of that TFR was already accrued and funded month by month. If the employee had resigned instead, the TFR would still be paid; the Ontario severance would not.

## What this means if you hire through an EOR

TFR is accrued monthly in Italian payroll and included in the monthly cost you are invoiced, so there is no surprise at exit. The EOR prepares the final payslip, pays TFR, files the termination notice and pays any NASpI ticket (passed through at cost). See the [cost calculator](/calculator.html), [Italian employment contracts](/italy-employment-contracts.html), [other countries](/italy-vs-your-country.html) or [contact us](/contact.html).

## Related guides for companies in Canada

- [CPP and EI vs INPS: the real employer cost](/articles/canada-cpp-ei-vs-inps-employer-cost.html)
- [Reasonable notice in Canada vs dismissal rules in Italy](/articles/canada-reasonable-notice-vs-italian-dismissal-rules.html)
- [Pregnancy and parental leave: Canada vs Italy](/articles/canada-parental-leave-ei-vs-italy.html)

*General information, not legal advice.*

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Source: https://hiringitaly.com/articles/canada-esa-severance-vs-italy-tfr.html · 2026-11-10