You’ve just been told your job is ending, and now there’s a severance package and a release in front of you, often with a deadline only a few days away. It’s natural to want to sign quickly and move on. But that signature usually means giving up your right to ask for anything more, forever. Before you sign, it’s worth slowing down and checking a few important things.
Is the deadline real?
Employers often set short deadlines to encourage a quick decision. In most cases, asking for a little more time to get legal advice is completely reasonable, and many employers agree. A polite email asking for a one- or two-week extension rarely causes problems. What you shouldn’t do is let a deadline pressure you into signing something you don’t understand.
It also helps to know that your minimum entitlements under Ontario’s Employment Standards Act (ESA) are owed whether you sign or not. An employer can’t hold back your statutory termination pay, severance pay or vacation pay until you sign a release. The release is usually about the extra money offered on top of those minimums.
How does the offer compare to what you’re owed?
This is the big question. Many first offers are based on ESA minimums or something close to them. But unless your employment contract contains an enforceable termination clause, you’re likely entitled to common law reasonable notice, which can be significantly more. A lawyer can compare the offer to what a court would likely award and tell you whether there’s room to negotiate.
What’s actually included?
Look beyond the dollar figure. Does the package continue your benefits, and for how long? What happens to your bonus, commission, pension contributions or stock options? Is accrued vacation pay included? For many employees, these pieces add up to a large part of total compensation. Executives in particular should read our article on bonuses and stock options after termination.
Also check whether the money is paid as a lump sum or as salary continuance. Salary continuance may stop or reduce if you find a new job, so the structure can change the real value of the offer.
What are you giving up?
Read the release carefully. Most releases waive all claims against the employer, including claims you may not have thought about, such as human rights or harassment claims. Some packages also include new confidentiality, non-solicitation or non-disparagement terms. Make sure you understand exactly what you’re agreeing to.
What else could you ask for?
Severance negotiations aren’t just about money. You can often ask for a positive reference letter, an agreed explanation of your departure, outplacement support, or a payment structure that’s more tax-efficient. These requests cost your employer little but can make a real difference to your next step.
Think about timing as well. If you’ve already lined up a new job, a lump-sum payment may be worth more to you than salary continuance. If you’re still searching, continued benefits might matter most. A lawyer can help you shape a counter-offer around what you actually need, rather than simply asking for more money.
Get a second opinion before you sign
A short review by an employment lawyer can often pay for itself many times over. Our Toronto employment lawyers review severance packages for employees across the GTA, including Etobicoke and Markham. Learn more about our employment law services.
Send us your severance package for review.
This article is general information, not legal advice.
