Should You Negotiate or Get a Lawyer to Review Your Severance Package?

Step 1: Check the offer against the statutory minimum you’re legally owed

Every employer in Ontario, Alberta, and under federal jurisdiction has to meet a legislated floor before anything else is negotiated. In Ontario, employees who reach five or more years of service (and whose employer meets a payroll threshold) qualify for a separate statutory severance pay entitlement on top of ordinary termination pay, as set out in the Employment Standards Act guide on severance pay. That statutory severance pay is capped at 26 weeks under the same Act. In Alberta, the Employment Standards Code’s Part 2, Division 8 sets the required process, notice periods, and termination pay, and the province is explicit that a terminated employee “may be entitled to more than the minimum amount of termination notice or pay required under employment standards.” Federally regulated employees (banks, airlines, telecommunications, and similar industries) fall instead under the Canada Labour Code, section 235, which requires statutory severance pay once an employee has completed 12 consecutive months of service, unless the dismissal is for just cause.

Step 2: Compare that floor to what “reasonable notice” could actually be worth

Statutory minimums are not the ceiling. At common law, an employee dismissed without cause is presumed entitled to reasonable notice, or pay instead of it, as an implied term of the employment contract, a principle first set out in Bardal v. Globe & Mail Ltd.. How much notice that translates to is decided case by case, using what are known as the “Bardal factors”: the character of the employment, length of service, age, and how available similar employment is, as applied in Chapell v. Canadian Pacific Railway Company. Because these factors vary so much from one employee to the next, two people with similar job titles but different ages or years of service can have very different entitlements, which is precisely why a severance offer that only mirrors the statutory minimum can leave real money on the table.

Step 3: Look for whether your contract’s termination clause is even valid

Many employment contracts try to limit an employee to the statutory minimum by contract. That clause only works if it’s properly drafted. Where a termination clause promises less notice than the statutory minimum, the Supreme Court of Canada has held the clause is void, and the employee falls back on common-law reasonable notice instead, which is often more generous than the original offer, as decided in Machtinger v. HOJ Industries Ltd.. Whether a specific clause is enforceable is a legal question that turns on its wording, not something a plain reading of the contract can reliably settle.

Step 4: Don’t sign the release before it’s reviewed

Severance offers almost always come with a release, a document waiving your right to bring further claims. Ontario courts have interpreted a release signed to end an employment relationship as covering “all claims” arising from that relationship, including claims the employee didn’t know about at the time of signing, according to Biancaniello v. DMCT LLP. Once signed, that release generally forecloses coming back later even if you discover the offer undervalued your entitlement. This is the point in the process where the timing of a legal review matters most: before signing, not after.

Step 5: Know that Ontario law forces a choice between two paths

If you’re in Ontario, taking action has a fork in it. The Employment Standards Act guide states that an employee “cannot sue an employer for wrongful dismissal and file a claim for termination pay or severance pay with the ministry for the same termination”; you have to pick one or the other. That decision is difficult to reverse once made, which is another reason to sort out your entitlements before filing anything. Federally regulated employees have a different structure: the Canada Labour Code allows an employee to receive statutory severance pay while still keeping the right to bring a separate unjust dismissal complaint, since the Code specifies that the employer’s severance obligation applies “whether or not the employee has a right” to pursue redress under other parts of the Act. Alberta’s Employment Standards Code guidance reviewed here does not set out an equivalent either/or election for Alberta employees, so that specific point was not verified for Alberta.

Step 6: Get legal advice before you negotiate or sign anything

Both provincial governments point employees toward legal advice rather than treating the statutory minimums as the end of the analysis. Ontario’s own termination guide states that “employees may wish to obtain legal advice concerning their rights”. Alberta’s government guidance goes further and directs employees to a specific resource: “you can use the Law Society of Alberta Lawyer Directory to find a lawyer who specialized in labour legislation and layoffs,” per Alberta.ca’s termination and lay-off page. Whether negotiating on your own, having a lawyer negotiate, or accepting the offer as-is makes sense depends on facts specific to your situation, length of service, whether your contract has a valid termination clause, and whether the offer reflects reasonable notice or just the statutory floor, that a lawyer reviewing the actual offer and contract is positioned to assess.