How to Negotiate a Better Severance Package in Ontario 

Being terminated from employment creates immediate financial pressure. Employers often present a severance package with a deadline and ask the employee to sign a release quickly. Many employees assume the offer is fixed, final and legally complete. 

In Ontario, that is often not the case. 

A severance package may reflect only part of what an employee is owed. Depending on the employment contract, the employee’s age, length of service, position, compensation and ability to find comparable work, the employer’s first offer may fall short of the employee’s full legal entitlements. 

Before signing, employees should understand how the offer was calculated, what has been excluded and whether negotiation is appropriate. 

Do Not Sign the Release Immediately in Ontario

A severance offer usually comes with a deadline. That deadline may feel urgent, especially where income, benefits and job security have ended at the same time. It is usually a bully sales tactic to get you to sign faster, than actually slow down and think about what you are signing away.  

A short deadline does not mean the offer is fair and usually signals something fishy is afoot. It also does not mean the employee should sign without legal advice. 

Most severance packages require the employee to sign a full and final release. Once signed, that release may prevent the employee from pursuing further compensation, even if important amounts were missing from the package. 

Before signing any release contract, an employee should confirm whether the offer properly addresses statutory minimums, common law notice, benefits, bonus, commission, pension, equity compensation, vacation pay and other compensation owing. There is also the issue of occupational health and safety, human rights, employment insurance and other claims that are surrendered if you sign right away.  

Understand What the Employer Has Actually Offered 

The first step in reviewing a severance package is identifying what legal basis the employer is using. 

Some offers are based only on the minimum amounts required under Ontario’s Employment Standards Act, 2000. Others rely on a termination clause in the employment contract. Some include an additional payment in exchange for a release. Others combine statutory amounts with a discretionary enhancement. They may seem like small matters, but they can lead to big losses if you do not know what is being signed away.  

ESA minimums are not the same as full severance. Non-unionized employees are entitled to common law reasonable notice unless a valid employment contract limits those entitlements. A termination clause that is unclear, outdated or contrary to employment standards legislation may be unenforceable. 

An employee should not assume the employer’s calculation is legally correct simply because it appears in a formal termination letter. 

Review the Full Compensation Package 

A proper severance review is not limited to base salary. 

Depending on the employee’s compensation structure, a severance package may need to address: 

• salary or wages over the notice period; 

• statutory termination pay and statutory severance pay; 

• bonus or incentive compensation; 

• commissions; 

• benefits continuation or compensation in lieu of benefits; 

• pension, RRSP, DPSP, or other retirement contributions; 

• stock options, RSUs, performance shares, or other equity compensation; 

• car allowance, phone allowance, or other taxable benefits; 

• vacation pay and unpaid wages; 

• expense reimbursement; 

• outplacement support; 

• reference language; and 

• restrictive terms in the release. 

These items can materially affect the value of the package. A severance offer that appears reasonable on base salary may be inadequate if it excludes bonus, commission, benefits, pension or equity compensation depending on a person’s remuneration. 

Consider Age, Service, Position, and Re-Employment Prospects in Ontario

Common law reasonable notice is assessed on a case by case basis (there is no mathematical formula).  

Courts always consider the employee’s age, length of service, character of employment, and availability of comparable work. Increasingly the law will look at someone’s skills, education, specialization, the state of the labour market, medical conditions and any special barriers to re-entering the job market. Senior employees, older employees, long-service employees have stronger claims to a longer notice period because they have been removed from the process of looking for a new role.  

This is why severance calculators can be useful as a starting point, but they are not a substitute for legal advice. The proper assessment depends on the facts, the contract, the compensation structure and the employee’s realistic mitigation prospects (how long it will take for someone to find new gainful employment). 

Identify Additional Legal Issues in Ontario

Some terminations involve more than a simple without-cause dismissal. 

A stronger negotiation position may exist where the termination occurred after the employee: 

• took medical leave; 

• requested accommodation; 

• disclosed a disability; 

• announced a pregnancy; 

• returned from parental leave; 

• reported harassment or discrimination; 

• raised a workplace safety concern; 

• made a complaint about unpaid wages; 

• refused an improper workplace demand; or 

• challenged a significant change to compensation, duties, hours, or work location. 

These facts do not automatically prove wrongdoing. They do, however, require careful review. Human rights issues, reprisal concerns, bad faith conduct, unpaid compensation or a disputed termination-for-cause allegation can materially affect the negotiation strategy. 

Respond Strategically 

Severance negotiations should be professional, evidence-based and targeted. 

A strong response identifies what is missing, why the offer is insufficient and what terms are required to resolve the matter. It should not simply ask for “more.” The response should connect the proposed counteroffer to the employee’s legal entitlements, compensation history, contractual rights, litigation risk and tell a story of why additional severance is required. 

In some cases, the right strategy is to make a detailed written counteroffer. In others, it may be better to open a without prejudice discussion with the employer or its lawyer before anchoring a number. 

The objective is not just to increase the payment. It is to resolve the matter on terms that protect the employee financially and legally. 

Get Legal Advice Before Signing 

A severance package is not routine paperwork. It is a legal settlement. 

Signing too early can result in the loss of significant compensation. It may also affect future claims, benefit rights, confidentiality obligations, non-disparagement obligations and post-employment restrictions. 

An employment lawyer can review the offer, assess the enforceability of the termination clause, identify missing compensation and negotiate improved terms where appropriate. 

Early advice is often the difference between accepting the employer’s first calculation and understanding the full value of the claim. 

Speak With a Toronto Employment Lawyer 

Lecker & Associates advises employees across Ontario on severance packages, wrongful dismissal claims, termination clauses, compensation disputes, and severance negotiations. If you have received a severance package, early legal review can help determine whether the employer’s offer reflects your full legal entitlements, including salary, bonus, commission, benefits, pension, equity compensation, vacation pay, and reference terms. Our team of Toronto employment lawyers can be reached at 416-223-5391 or intake@leckerslaw.com for a confidential consultation.

How Lecker & Associates Can Help

Lecker & Associates advises employees across Ontario on termination packages, wrongful dismissal claims, fixed-term contract disputes, and severance negotiations. If your fixed-term contract ended before the agreed end date, early legal review can help determine whether the employer had the right to end the contract, whether the termination clause is enforceable, and whether the offer reflects the full value of the remaining term. Our team of Toronto employment lawyers can be reached at 416-223-5391 or intake@leckerslaw.com for a confidential consultation.

FAQ: How to Negotiate a Better Severance Package in Ontario

Can I negotiate my severance package in Ontario? 

Yes. Many severance packages can be negotiated, particularly where the offer is limited to ESA minimums, relies on a questionable termination clause, or excludes important compensation such as bonus, commission, benefits, pension, or equity.

What should I ask for in a severance package in Ontario?

The answer depends on your employment history and compensation structure. Common negotiation items include additional notice compensation, benefit continuation, bonus or commission payments, pension or RRSP contributions, equity compensation, vacation pay, a reference letter, outplacement support, and revisions to the release.

Can my employer withdraw the offer if I negotiate?

Employers do not usually withdraw an offer simply because an employee seeks legal advice or makes a reasonable counteroffer. However, negotiations should be handled professionally and strategically. Employees should avoid sending emotional, inaccurate, or unsupported responses.

Should I use a severance calculator in Ontario? 

A severance calculator can provide a general estimate, but it cannot determine your legal entitlement on its own. The enforceability of your employment contract, your compensation structure, your age, your length of service, your position, and the availability of comparable work all require legal assessment.