For many employees, a severance package arrives before termination with little explanation and an expectation of a quick signature. But these agreements are not always the last word on what an employee is owed.
Misconceptions are common, in part because these offers are often presented as routine or non-negotiable, and employees are commonly told they have limited time to decide. That framing can obscure key legal rights and create misunderstandings about what severance actually covers.
Here are five common myths about severance packages, what employees should know before signing, and how an employment law firm can help.
Myth 1: Severance entitlement is a simple calculation
It is tempting to assume that severance pay can be calculated using a straightforward formula. Online calculators often reinforce that impression by producing a number based on a handful of basic details. In practice, those tools provide a rough estimate at best and sometimes a misleading one.
Determining how much severance or pay, instead of notice, an employee may be entitled to is a fact-specific exercise. Courts routinely spend significant time analyzing the circumstances of a termination before reaching a conclusion.
Salary and length of service are relevant factors, but they are not determinative. Entitlement may also depend on the terms of the employment contract, the employee’s role and seniority, the manner of dismissal, and the availability of comparable work in the employee’s field, among other considerations.
When reviewing a severance package offer or wrongful dismissal claim, our team produces an individualized assessment, tailored to the unique circumstances of your case.
Myth 2: Severance packages are non-negotiable
Severance offers are often presented as final, with employers setting short deadlines for acceptance. That can create the impression that there is no room for discussion and that refusing to sign will make matters worse.
In reality, many severance terms are negotiable. An employment law firm can not only help you determine whether the terms of the employer’s offer are fair, but it can also identify areas where you may be able to push back or ask for more in negotiations.
In addition to assessing the notice, benefits, and bonus offered in your package, a lawyer may also suggest amendments to loosen or remove the non-solicitation or non-compete clauses that are frequently found in releases that employees are asked to sign as part of their agreement.
Myth 3: Termination clauses are foolproof
Many employment contracts contain termination clauses that are intended to limit an employee’s severance entitlement to the statutory minimums set out in Ontario’s Employment Standards Act, rather than the more generous notice entitlements that would otherwise be due to them under the common law.
However, the presence of a termination clause is not the end of the issue, since the law in this area is constantly evolving. In recent years, judges have frequently invalidated these clauses when employers fail to meet the very strict requirements the courts have set for contracting out of the common law.
As a result, whether a termination clause is enforceable often depends on careful legal interpretation, informed by recent case law and the specific wording of the contract. An employment law firm can review the clause in context and assess how a court is likely to approach it, given the current state of the law.
For employees who have already been dismissed, legal review may also extend beyond the contract itself. Courts can consider how the termination was carried out and whether the employer met its statutory and contractual obligations. In cases involving discriminatory, harassing, or bad-faith conduct, judges may award additional punitive or bad-faith damages.
Myth 4: My tenure was too short to challenge my employer’s severance offer
Employees on a fixed-term contract or whose termination occurred within a year or two of their employment are often happy to accept any kind of severance offer from their employer.
However, depending on the circumstances of their dismissal and the terms of any employment contract, they may be entitled to more than they think and potentially more than their employer offered.
This is particularly true where compensation is not limited to base salary. Employees paid by commission or performance-based incentives, or those receiving bonuses, equity, vehicle allowances, or extended benefits, may have additional entitlements that are not always fully reflected in an employer’s offer.
A legal review can help identify whether all components of compensation have been properly accounted for and whether the offer reflects the employee’s actual legal position, regardless of how long they were employed.
Myth 5: Having an employment law firm review my package is too expensive
Many employees hesitate to seek legal advice after a termination because they assume the cost will outweigh any potential benefit.
At Edwards Pollard LLP, we offer flat-rate reviews of termination and severance offers to help employees understand whether a proposal reflects their legal entitlements before they agree to its terms.
On those occasions where the employer’s severance offer is fair and acceptable, clients still benefit from the peace of mind that comes from having a legally trained eye confirm the package is in their best interests.
If your employer has offered you a severance package or you believe you’ve been wrongfully dismissed, feel free to contact our employment law firm for guidance.