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Received a Severance Package? Have It Reviewed By an Employment Lawyer Before You Sign.
Being offered a severance package can leave you with important decisions to make about your financial future. While employers often provide termination packages shortly after ending an employee’s employment, the first offer may not always reflect your full legal entitlements. Before signing a release or accepting your employer’s offer, it is important to understand your rights and what you may be entitled to under Ontario law.
Our Toronto employment lawyers help employees across Ontario review severance packages, assess whether the compensation offered is fair, and negotiate improved outcomes where appropriate. If you have received a severance package after being terminated without cause or wrongfully dismissed, Roberts & Obradovic Employment Lawyers can explain your options and help you make an informed decision before signing. Book your consultation with our Ontario Severance Package Review lawyers today to discuss your options.
What Are Your Rights to Severance Pay in Ontario?
Receiving a severance package after termination can be overwhelming, especially when you are presented with a deadline to accept your employer’s offer. However, the first package you receive may not always reflect your full legal entitlements. Understanding how severance works in Ontario can help you make informed decisions before signing any agreements.
Determining the amount of severance you are owed in Ontario is rarely a simple calculation. It typically involves distinguishing between the statutory minimums required by the government and the often much larger common law entitlements determined by the courts. You can get an early estimate using our Ontario Severance Pay Calculator — a quick way to see what you may be owed.
Severance Pay vs. Termination Pay Entitlements
Many employees use the terms “severance pay” and “termination pay” interchangeably, but they actually refer to different legal entitlements under Ontario law.
- Termination pay is the minimum amount an employer may owe an employee when ending their employment without cause, based on the requirements of the Employment Standards Act (ESA). It is intended to provide compensation during the notice period required by law.
- Severance pay is a separate ESA entitlement that may apply to eligible employees who have been terminated. This is intended to compensate employees for their loss of employment and recognize factors such as their length of service and contribution to the employer.
However, many employees may also have rights beyond the ESA minimums. Depending on the circumstances, an employee may be entitled to common-law reasonable notice, which can provide greater compensation than termination pay and severance pay.
Ultimately, there is no single formula for determining how much severance an employee is owed. The amount of compensation available depends on several factors, including:
- Length of employment: Employees with longer service may be entitled to longer notice periods.
- Age: Older employees may have more difficulty finding comparable employment and may receive longer notice periods.
- Position and responsibilities: Senior employees, managers, and specialized professionals may have greater entitlements.
- Compensation structure: Salary, bonuses, commissions, benefits, and other forms of compensation may affect the value of a severance package.
- Employment contract: The wording of your employment agreement, including any termination clause, can significantly impact your rights.
- Availability of similar work: The likelihood of finding comparable employment may also be considered when assessing reasonable notice.
Because severance entitlements depend on the unique circumstances of each employee, a package should be evaluated based on your specific situation rather than a general estimate.
Understanding your severance rights is an important step after losing your job. Before accepting an employer’s offer, take the time to understand whether the package reflects your full legal entitlements and what options may be available to you.
Who Qualifies For Severance Pay in Ontario?
Not every employee is automatically entitled to statutory severance pay under the ESA. Severance pay eligibility depends on various factors, such as how long you worked for your employer and the size or circumstances of the employer’s business.
Generally, you may qualify for ESA severance pay if:
- You have worked for your employer for five years or more, and
- Your employer has a total Ontario payroll of at least $2.5 million, or 50 or more employees are terminated within a six-month period because all or part of the employer’s business permanently closes.
The five-year requirement can be met through your combined period of employment where the ESA’s rules for calculating length of employment apply. There are also specific statutory exclusions, meaning that certain employees may not be entitled to ESA severance pay even if they otherwise appear to meet these requirements.
This is why reviewing a severance package is important. An employer may offer an amount that satisfies its statutory obligations without necessarily providing everything you may be entitled to under your employment contract or the common law. A severance package should be reviewed in the context of your length of service, age, position, compensation, contract, and other relevant circumstances before you accept it.
Why Should Your Severance Package Be Reviewed?
Employers often provide severance packages with deadlines for acceptance, but employees should understand what they are agreeing to before signing. Many termination packages include a release that prevents an employee from pursuing additional claims against their employer in the future.
A severance package may also fail to account for important aspects of your compensation, including bonuses, commissions, benefits, pension contributions, stock options, or other employment-related entitlements. In some cases, termination clauses in employment contracts may also affect what an employee is legally entitled to receive.
Because every employment relationship is different, an offer that appears reasonable at first glance may not reflect your full legal rights. Having a severance package reviewed can help you understand whether the compensation offered is fair and whether negotiation may be appropriate.
What to Do If You’ve Received a Severance Package
Receiving a severance package can be overwhelming, particularly when you are being asked to make important decisions on a short timeline. Before accepting an offer or signing a release, take the time to understand what you are being offered and whether it reflects your legal entitlements.
1. Review Your Severance Package and Employment Documents
Start by carefully reviewing your termination letter, severance offer, employment contract, and any other documents provided by your employer. Pay close attention to the compensation being offered, continuation of benefits, termination provisions, and any release you are being asked to sign. Do not assume that the amount offered by your employer represents everything you may be entitled to receive. The terms of your employment agreement and the circumstances surrounding your termination can affect your rights.
2. Determine What You May Be Entitled To
Your entitlements should not be assessed solely against the ESA minimum standards. Depending on your circumstances, you may have additional rights under your employment contract or the common law. Factors such as your age, position, length of service, compensation, employment history, and the terms of your employment agreement may all be relevant when determining whether your severance package is adequate.
3. Get Legal Advice Before Signing a Release
Severance packages commonly include a release requiring you to give up potential legal claims against your employer in exchange for the compensation being offered. Once you sign a release, your ability to pursue additional compensation may be significantly limited. If you have concerns about your package, consider having it reviewed by an employment lawyer before signing. A legal review can help you understand what rights you may be giving up and whether the proposed compensation is appropriate.
4. Consider Negotiating the Offer
If your severance package does not adequately reflect your legal entitlements, you may be able to negotiate with your employer. An employment lawyer can assess the offer, identify areas of concern, and negotiate with your employer or their legal representatives on your behalf. The goal extends beyond accepting or rejecting the package, aiming to understand your position and determine what outcome is appropriate in the circumstances.
Every severance package is different. The right course of action will depend on your employment agreement, the circumstances of your termination, and the compensation your employer has offered.
At Roberts & Obradovic Employment Law, our severance pay lawyers help employees understand their rights, assess their severance packages, and determine whether the offer reflects what they may be entitled to under Ontario law. We provide clear, practical guidance so you can make an informed decision about how to proceed.
Severance Pay Matters We Help With
Whether you have just received a termination package or are questioning whether your employer’s offer is fair, Roberts & Obradovic provides practical legal guidance tailored to your circumstances. Our employment lawyers review severance packages, explain your legal entitlements, and advocate for fair compensation on behalf of employees across Ontario.
Severance Package Reviews
Many employees are unsure whether the severance package they have been offered reflects their full legal entitlements. We carefully review your termination letter, employment contract, severance package, and other relevant documents to determine whether your employer’s offer is fair and complies with Ontario employment law.
Negotiating Severance Packages
A severance package is not always final. In many cases, employers may be willing to negotiate after receiving legal submissions that explain why additional compensation may be appropriate. Our lawyers communicate directly with employers and their legal representatives to pursue improved severance packages while protecting your legal rights.
Employment Contract and Termination Clause Reviews
The terms of your employment agreement can significantly affect your severance entitlements. We review employment contracts and termination clauses to determine whether they are enforceable, and how they may impact the compensation you are entitled to receive following the end of your employment.
Executive Severance Packages
Executives, managers, and other senior employees often have more complex compensation arrangements that extend beyond base salary. We assist with severance packages involving bonuses, commissions, stock options, deferred compensation, pension contributions, benefits, and other contractual entitlements to ensure every aspect of your package is properly evaluated.
Wrongful Dismissal and Severance Disputes
If your employer has offered inadequate compensation, denied severance, or relied on an unenforceable termination clause, you may have legal options beyond accepting the initial offer. In some circumstances, these situations may also give rise to a wrongful dismissal claim. Our lawyers assess your circumstances, explain your rights, and advocate for the compensation you may be entitled to.
Why Choose Us For Your Severance Pay Review?
We represent employees, never employers. At Roberts & Obradovic, we are committed to protecting the rights of employees throughout every stage of the employment relationship. Receiving a severance package can be overwhelming, especially when you are under pressure to make a quick decision. Our employment lawyers provide practical legal advice to help you understand your options and move forward with confidence.
We understand Ontario severance law. Determining whether a severance package is fair involves more than comparing it to the minimum standards set out in the Employment Standards Act. Our lawyers carefully assess every aspect of your severance package to determine whether your employer’s offer reflects your legal entitlements.
We review every severance package individually. No two severance packages are exactly alike. Compensation may include salary continuance, termination pay, severance pay, bonuses, commissions, benefits, vacation pay, pension contributions, or other contractual entitlements. We take the time to review the details of your employment and explain how they may affect your rights.
We negotiate strategically to protect your interests. Many severance matters can be resolved through negotiation without the need for litigation. Our lawyers communicate directly with employers and their legal representatives to pursue fair compensation while protecting your rights throughout the process. If litigation becomes necessary, we are prepared to advocate for your interests every step of the way.
Frequently Asked Questions About Severance Pay in Ontario
Is my severance package taxable in Ontario?
Yes. Severance pay is considered taxable income in Canada. It will appear on your T4 and may affect your tax bracket for the year. Whether you receive the money as a lump sum or salary continuance, it is still subject to income tax. A consultation with our employment lawyers can help you understand what your severance pay will look like after income tax.
Can I still get EI if I receive severance?
Yes. Receiving severance pay does not disqualify you from Employment Insurance (EI). However, EI may be delayed when you are receiving severance, because severance pay is treated as income. Once the severance period has ended, and if you are eligible, you can begin receiving EI benefits.
What’s included in a severance package?
A severance package may include several forms of compensation and benefits, depending on the circumstances of your termination. This may include termination pay, severance pay, salary continuation, benefits continuation, bonuses, commissions, vacation pay, pension contributions, or other employment-related entitlements. The contents of each package can vary significantly based on your employment agreement and individual situation.
Is severance pay the same as termination pay?
No. Termination pay is compensation you receive when your employer ends your job without notice. Severance pay is an additional amount owed to certain long-service employees at larger companies. Termination pay covers the lost notice period, while severance pay recognizes your years of service and the impact of being let go.
How is severance calculated in Ontario?
There is no single formula for calculating severance entitlements in Ontario, as the amount an employee is owed depends on various factors. While the ESA provides minimum entitlements, some employees may be entitled to additional compensation under the common law. While severance calculations are not an exact science, they can be estimated using our Severance Pay Calculator.
Can severance pay be paid over time?
Yes. Employers may pay severance as a lump sum or through salary continuance (installments over time). Both options have different tax and financial effects. This is negotiable, and an employment lawyer can help you choose the structure that benefits you most.
Can I negotiate or reject my severance package?
Yes. If the offer seems low or unfair, you can negotiate or outright decline it. Rejecting a severance package does not mean you inherently lose your right to compensation. In many cases, employees can receive more accurate compensation after an employment lawyer reviews and negotiates the package with your employer.
How long do I have to accept a severance package?
There is no law in Ontario that requires you to sign within a specific timeframe. Employers often give a deadline of 48 hours to one week, but this can be negotiated. Employees must be given reasonable time to review their options and obtain legal advice before accepting a severance offer, and in most cases, your employer’s original deadline can be extended.
What happens if I already signed my severance package?
If you have already signed a severance package, your options and entitlements may depend on the circumstances surrounding the agreement, including the terms of the release and whether you had an opportunity to understand it before signing. If you have concerns about the package you accepted, speaking with an employment lawyer can help you understand what options may be available to you.
Receiving a severance package can raise important questions about your financial future and legal rights. Before accepting an employer’s offer, it is important to understand whether the compensation provided reflects what you may be entitled to receive.
At Roberts & Obradovic, our employment lawyers help Ontario employees review severance packages, assess their legal entitlements, and negotiate fair compensation where appropriate. We provide personalized guidance to help you make informed decisions after termination. Contact our employment lawyers today to have your severance package reviewed and understand your legal options.
