Severance Agreements in Ontario: Why You Should Have an Employment Lawyer Review Your Package
Getting a severance package can feel like a relief, until you read the fine print. Many employees in Ontario are offered a severance agreement (also called a termination package or separation agreement) and are told it’s “Standard,” “generous,” or “time-sensitive.”
But here’s the truth: a severance offer is often a starting point, not the final word. Before you sign anything, it can make a major difference to have an experienced Ontario employment law firm review your severance package and explain what you’re giving up.
What is a severance agreement?
- A lump-sum payment or salary continuance
- Benefits continuation (health, dental, life insurance)
- Bonus/commission treatment
- Vacation pay and expense reimbursement
- A release of claims (you agree not to take legal action)
- Confidentiality and non-disparagement clauses
- Return-of-property obligations
- Non-competition or non-solicitation restrictions
“Severance” in Ontario: ESA minimums vs. common law entitlements
One of the biggest misunderstandings employees have been assuming their severance is limited to the Employment Standards Act, 2000 (ESA) minimums.
In Ontario, the ESA sets minimum termination entitlements (like termination pay and, in some cases, statutory severance pay). But many employees are entitled to significantly more under common law reasonable notice, unless they have a valid employment contract that limits them.
That’s why a severance package review matters: a lawyer can help determine whether your offer reflects only ESA minimums or whether you may be owed more.
Why employers want you to sign quickly
Severance agreements often include deadlines like “sign within 5 days” or “offer expires in 48 hours.” That pressure is not an accident.
Once you sign:
- You may waive your right to claim additional compensation
- You may give up claims related to discrimination, harassment, or unpaid wages
- You may accept restrictive terms that affect your future career
A severance agreement is not just about money; it’s about your rights.
What employees often overlook in severance agreements (real-world examples)
Even smart, experienced employees miss key details because they’re stressed, surprised, or trying to move on. Here are common “hidden” issues your severance lawyer will look for.
The release is broader than you think
- Human rights claims (disability, pregnancy, age, race)
- Workplace harassment claims
- Unpaid overtime or vacation pay disputes
- Bonus/commission disputes
If you have any concerns about how you were treated at work, do not sign before getting legal advice.
Bonus and commission language that quietly cuts you off
Employers sometimes offer severance that looks fine—until you realize it excludes:
- A bonus you were close to earning
- Commission on deals already in the pipeline
- Incentive pay tied to performance periods
Benefits continuation that ends too early
Salary continuance with strings attached
- Mitigation requirements (your severance stops if you find a new job)
- Reporting obligations (you must disclose your job search)
- Offsets against other income
Non-disparagement and confidentiality clauses that are one-sided
Non-compete / non-solicit terms that can limit your next job
- Where you can work
- Which clients you can contact n- Whether you can hire former colleagues
Misclassification issues (contractor vs. employee)
If you were treated like an employee but paid as a contractor, you may still have rights to termination entitlements.
Example: You had one “client,” worked set hours, used company tools, and reported to a manager. A lawyer can assess whether you were misclassified and whether your severance should be higher.
“With cause” allegations or performance wording
Sometimes an agreement includes language that implies misconduct or poor performance.
Example: The employer offers money but labels the termination as performance related. That can affect your reputation, references, and even future employment. A lawyer can push for neutral language.
Why it makes sense to have an Ontario employment lawyer review your severance package
A severance package review is about leverage, clarity, and protection.
An experienced Ontario employment lawyer can:
- Calculate what you may be entitled to under common law
- Review your employment contract for enforceable termination clauses
- Identify missing compensation (bonus, commission, benefits, vacation)
- Flag risky clauses (release, confidentiality, non-compete)
- Negotiate a better package—often without you having to confront your employer directly
- Help you avoid signing away rights you didn’t know you had
What to bring to a severance agreement review
To get the most accurate advice, gather:
- Your severance offer and any attachments
- Your employment contract and any amendments
- Recent pay stubs and bonus/commission plan documents
- Benefit plan details
- Performance reviews (if relevant)
- Any emails or notes about the termination meeting
Don’t sign a severance agreement until you understand it
If you’ve been terminated, you’re likely dealing with stress, uncertainty, and urgency. That’s exactly when people sign agreements they later regret.
Before you sign a severance agreement in Ontario, get advice from an experienced employment law firm. A short review can help you understand your rights, avoid hidden traps, and negotiate a package that reflects what you’re truly owed.
Speak with an Ontario employment law firm
If you received a severance package and have questions, talk to an experienced Ontario employment law firm. We can review your severance agreement, explain your options, and help you protect your future.
