You’ve just been let go. Along with the news comes a document: your severance package. It may look official and final, sometimes with a deadline attached. The instinct to sign quickly and move on is understandable. But signing before you understand the offer can cost you.
The first severance package Ontario employers offer may reflect only minimum Employment Standards Act entitlements, rather than the full amount an employee could receive under the common law. Before signing anything, it may be worth having a lawyer review the offer and your employment contract.
What is a severance package in Ontario?
“Severance package” is an everyday term for the compensation and other terms an employer offers when employment ends. It may include pay in place of notice, continued benefits, and sometimes other payments.
The confusion often comes from the different types of entitlement that may apply. Under Ontario’s Employment Standards Act (ESA), an employee may be entitled to written notice, termination pay in place of notice, or a combination of both. Some qualifying longer-service employees may also receive separate ESA severance pay. These are minimum statutory rights.
ESA notice is generally one week per year of service, up to eight weeks. ESA severance pay, for eligible employees with five or more years at larger employers, adds up to 26 more weeks. Benefits must continue through the notice period.
Depending on the employment contract and the circumstances, an employee may also have a common-law right to reasonable notice or pay in place of notice. That assessment is individualized and can consider factors such as the employee’s age, length of service, position, and prospects of finding comparable work (often called the “Bardal factors”). A valid employment contract can limit those common-law rights, which is why the contract is an important part of any review.
Why signing quickly is rarely in your best interest
Employers often present severance offers with a tight deadline. That pressure isn’t an accident. The faster you sign, the less likely you are to question the amount or get advice.
Once you sign a release, you will usually give up the right to ask for more. You may be able to ask for additional time to review the offer, particularly if you are seeking legal advice. Signing quickly feels like closure. In reality, it can prevent you from pursuing a better outcome before you understand your legal position.
Is my severance package fair?
A few things tend to signal that an offer falls short:
- Length of service. Longer tenure usually means larger entitlement, well beyond the ESA minimum.
- Your age, role and job prospects. Older employees and people in senior or specialized positions may require more time to find comparable work, which can affect the notice period.
- The number itself. If the package lines up almost exactly with the ESA minimum, it likely doesn’t reflect your full rights.
- Missing compensation. Check for vacation pay, bonuses, commissions, stock options, pension and benefits.
- A restrictive contract clause. Some employment contracts try to limit termination entitlements to ESA minimums. Whether that clause is enforceable depends on its wording and the contract as a whole.
On that last point, Ontario courts have found some termination clauses unenforceable when they fall below ESA standards or create uncertainty about an employee’s minimum rights. In Waksdale v. Swegon (2020), the Court of Appeal held that one non-compliant provision can void the entire termination clause But a clearly written clause that complies with the ESA may be enforceable. The practical takeaway is that a signed contract matters, but it should be reviewed carefully before you assume it settles the question.
The value of working with a severance package review lawyer
You might wonder whether hiring a lawyer just eats into what you’d gain.
A severance lawyer Ontario employees can turn to will assess the offer, your contract, and your circumstances, then explain whether the offer reflects your potential ESA and common-law entitlements. The value of legal advice will depend on the facts of your case.
How to negotiate your severance package in Ontario
Negotiating doesn’t have to mean conflict. Most cases are resolved through calm, professional back-and-forth. Here’s how it generally works:
- Don’t sign yet. Acknowledge the offer, but hold off on accepting it.
- Gather your documents. Your contract, offer letter, pay records, bonus and benefits records and the severance offer itself all help build the picture.
- Get the offer reviewed. A severance lawyer in Ontario will assess whether the number reflects your ESA and common-law entitlements.
- Respond with a counter-proposal. If the offer is low, your lawyer can reply with a measured, evidence-based response.
- Reach a fair resolution. Many employers come back with a better number once they know you’ve gotten legal advice.
The goal isn’t to fight your former employer. It’s to make sure what you receive reflects what you’re genuinely owed.
Your next step
Losing a job is stressful enough without wondering whether you were treated fairly. Finding out is simpler than most people expect, and often well worth it.
Before you sign anything, consider a free half-hour consultation with Epstein & Associates PC. With offices in Richmond Hill, Newmarket, Mississauga, Oshawa, and Barrie, we assist employees across Ontario. We’ll review your offer, explain your options in plain language, and help you figure out what makes sense for you.
