Before You Do Anything: You Have Time
If you've just been handed a severance package, the most important thing to know is this: you almost certainly do not need to sign it on the spot. Even when an employer presents the offer as "take it or leave it," that framing is usually a negotiation tactic, not a legal reality. You're being asked to give up legal rights, and the law expects you to have a meaningful chance to consider what you're signing.
Take a breath. Don't sign in the meeting. Don't sign the same day. Asking for time to review the document, or to speak with an employment lawyer, is a normal and reasonable request, not a hostile one. Most employers expect it.
With that said, here are five specific things to look at before you put pen to paper.
1. The Deadline
Almost every severance offer includes a deadline. Typical windows are five to ten business days, though some employers give two weeks or more. The deadline is real in the sense that the offer on the table may expire, but it is not a deadline by which you must give up your legal rights forever. If the offer lapses, your underlying entitlement to reasonable notice doesn't disappear; you simply lose the specific package being offered.
Use the time. Read the entire document, including the attachments. Compare what's being offered against what you would likely be entitled to under common law. If the deadline doesn't leave you enough time to get advice, ask for an extension in writing. Polite, brief requests for additional time are common and frequently granted.
A Simple Extension Request
Something like the following is usually enough:
"Thank you for the package. I'd like to review it carefully and consult with an employment lawyer. Could you please extend the deadline by an additional [one to two] weeks so I have time to do that properly?"
2. The Amount vs. Your Real Entitlement
Initial severance offers are almost always anchored to the Employment Standards Act (ESA) minimum, sometimes with a small amount on top. The ESA is a floor, not a ceiling. Most non-unionized employees in Ontario are entitled to common law reasonable notice, which is typically two to three times the ESA minimum, and in many cases significantly more.
Common law notice is determined by the "Bardal factors," named after the leading case. Courts look at four main considerations:
- Length of service — generally, more years with the employer means a longer notice period.
- Age — older employees often receive longer notice because finding comparable work tends to take longer.
- Character of employment — senior, specialized, or management roles typically warrant longer notice than junior or general roles.
- Availability of similar employment — if your industry is contracting or your role is niche, that increases the notice period.
Many employment contracts try to limit severance to ESA minimums through a termination clause. But following Waksdale v. Swegon North America Inc., 2020 ONCA 391, Ontario courts have struck down a large number of these clauses as unenforceable, often because of how the "for cause" portion is drafted. If your termination clause is unenforceable, you fall back to common law, and the offer in front of you may be a fraction of what you're actually owed.
Not sure what your real entitlement is?
Estimate it in 60 seconds with our free severance calculator. It uses the same Bardal factors a lawyer would consider.
3. The Release Language
The most consequential part of any severance package is usually the release. A release is a contract in which you agree, in exchange for the package, not to sue your employer for anything related to your employment or its end. Once you sign a properly drafted release, it's very difficult to unwind.
Standard release language is often broad. A typical "full and final release" can ask you to waive:
- All claims arising from your employment and its termination
- Human rights claims (including discrimination and harassment)
- Claims for unpaid wages, vacation, bonuses, or commissions
- Claims for unvested or vested equity
- Future claims you don't yet know about
- Claims against related entities, parent companies, directors, and officers
Read each clause carefully. If you have a potential human rights complaint, an unpaid bonus, or a workplace safety concern, those can be very valuable claims, and you may be signing them away for nothing more than the ESA minimum dressed up as a generous gesture. A lawyer can flag what's actually being waived and whether the trade is fair.
4. Bonus and Equity Treatment
If your compensation includes a bonus, commission, RSUs, stock options, or any other variable or equity-based pay, this is often where the most money is left on the table. Employers will frequently structure offers so that bonuses and unvested equity are forfeited at termination, even though the law doesn't necessarily allow that.
In Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26, the Supreme Court of Canada confirmed that employees are generally entitled to bonuses and equity that would have vested during the reasonable notice period. To take that away, a contract or plan document needs to:
- Use language that is clear, unambiguous, and absolute
- Explicitly cover the period of reasonable notice (not just "active employment")
- Be brought to the employee's attention in a meaningful way
Many bonus and equity plans don't meet that bar. They use vague phrases like "you must be actively employed on the payment date" without addressing what happens during the notice period. Courts have repeatedly found that kind of language insufficient to extinguish the entitlement.
Worth Checking Before You Sign
If any of the following apply, your offer may be missing significant value:
- A bonus that would normally have paid out during your notice period
- RSUs or options that would have vested during your notice period
- Pro-rated commissions on deals already in progress
- A long-term incentive plan with a payout window crossing your termination date
5. Restrictive Covenants
Severance documents often include, or attempt to add, restrictive covenants. These are clauses that limit what you can do after you leave. The three most common are:
Non-Competition Clauses
In Ontario, non-compete clauses for most employees have been banned since October 25, 2021 under Employment Standards Act s.67.2 (added by the Working for Workers Act, 2021), with narrow exceptions for executives and sale-of-business contexts. Even where they're permitted, courts only enforce non-competes that are reasonable in scope, duration, and geography. A broad "you can't work in this industry for two years" clause is usually unenforceable — but only if you're willing to challenge it. A contract review with an employment lawyer can identify which restrictive covenants in your offer are likely to hold up.
Non-Solicitation Clauses
These restrict you from contacting customers, clients, or former coworkers. They're more likely to be enforceable than non-competes, but only if they're narrowly tailored to genuine business interests. Look closely at the time period and the definition of "customer" or "client."
Non-Disparagement Clauses
These prevent you from saying anything negative about the employer. They often go further than people realize, applying to social media, references for former colleagues, and conversations with future employers. Mutual non-disparagement (which binds both sides) is much fairer than a one-way clause that only restricts you.
Watch out for severance offers that introduce new restrictive covenants you never agreed to during your employment. Some employers will quietly bundle a fresh non-solicit or non-compete into the severance documents, effectively asking you to pay for your own severance with future career restrictions. You can often negotiate these out, or at least narrow them, in exchange for signing.
What to Do Before You Sign
If you take only one thing from this article, let it be this: signing is a one-way door. Once the release is signed and the payment is processed, your options narrow dramatically. Here's a practical checklist:
- Don't sign immediately. Acknowledge receipt, but don't commit on the spot.
- Read everything, including the attachments. Bonus plans, equity plans, and benefit documents often contain critical language.
- Locate your employment contract and any amendments, offer letters, or signed bonus and equity plan documents.
- Estimate your common law entitlement using your length of service, age, role, and the job market in your field.
- Identify your "extras" — bonuses, RSUs, options, commissions, and benefits that should be factored into the package.
- Ask for an extension if you need one. A short, written request is usually granted.
- Get an employment lawyer to review the offer. A short consultation can quickly tell you whether the package is fair and where there's room to negotiate.