Severance Agreements

Understanding Severance Packages in Ontario

What many don't realize is that the statutory minimums often fall far short of what an employee may be legally entitled to receive. Factors such as age, position, length of service, and the availability of comparable employment can significantly impact proper severance calculations.

For employers, developing appropriate severance packages requires balancing fair treatment with business protection and risk management. A poorly structured severance agreement may lead to costly litigation or fail to protect legitimate business interests during the transition.

The Hidden Risks in Severance Agreements

Both employees and employers face significant risks when handling severance agreements without proper legal guidance:

For Employees:

Accepting an inadequate severance package can have lasting financial consequences. Many employees face pressure to sign agreements quickly, often without understanding:

• The significant gap between minimum statutory entitlements and common law notice periods
• How restrictive covenants might limit future employment opportunities
• The full scope of benefits, commissions, or bonuses they may be entitled to
• The tax implications of different severance payment structures
• How accepting a package affects eligibility for employment insurance benefits

We regularly see employees who have unknowingly accepted packages worth substantially less than their legal entitlements, sometimes leaving tens of thousands of dollars on the table. Even more concerning, many sign away important legal rights without proper compensation or understanding.

For Employers:

Businesses face their own set of challenges when crafting severance agreements. A poorly developed package can expose the company to:

Expensive wrongful dismissal claims that far exceed the cost of an appropriate initial offer

Ineffective protection of confidential information and client relationships

Reputational damage affecting remaining employee morale and recruitment

Allegations of bad faith in the termination process that may increase potential damages

Our Severance Agreement Services

At Belsito Law, we provide comprehensive severance agreement services tailored to the specific needs of both employees and employers:

For Employees: Professional Severance Review

When you've received a severance offer, our team provides thorough assessment and guidance to help you make informed decisions:

Detailed Package Analysis

We conduct a comprehensive review of your severance package, comparing it against both statutory requirements and common law entitlements based on your specific circumstances. Our analysis evaluates:

The adequacy of the notice period or payment in lieu of notice

Treatment of benefits, bonuses, stock options, and other compensation elements

Restrictive covenants and their potential impact on future employment

Release provisions and their legal implications

Tax implications and payment structure considerations

Strategic Negotiation Support

If your package falls short of appropriate entitlements, we provide effective negotiation support to secure fair compensation. Our approach includes:

• Development of clear, persuasive counteroffers grounded in legal precedent
• Strategic communication with employers or their counsel
• Practical advice on negotiation tactics and timing
• Alternative dispute resolution approaches when appropriate

When negotiation isn't sufficient, we provide guidance on formal legal options including wrongful dismissal claims, human rights applications, or other appropriate proceedings to secure your entitlements.

For Employers: Effective Severance Planning and Implementation

Our services help businesses develop and implement severance strategies that balance fairness with appropriate business protection:

• Development of legally compliant severance packages that minimize litigation risk
• Guidance on handling complex termination situations (executive departures, group layoffs, etc.)
• Creation of effective release documents that protect company interests
• Strategic advice on managing termination meetings and communications
• Defence against excessive claims and negotiation of reasonable resolutions

The Severance Review Process

Our approach to severance matters is designed to provide clear, practical guidance through this challenging transition:

Initial Consultation

We begin with a detailed discussion of your specific situation, reviewing relevant documents and employment history to understand the full context. For employees, this includes examination of:

The proposed severance agreement and any supporting documents

Your employment contract and any relevant policies

Compensation history including bonuses, commissions, and benefits

The circumstances surrounding the termination

For employers, we discuss business objectives, risk factors, termination circumstances, and relevant documentation to understand the specific context.

Legal Assessment and Strategy Development

Based on the initial consultation, we provide:

• Clear explanation of legal entitlements and obligations
• Assessment of the adequacy or compliance of proposed severance terms
• Identification of potential issues requiring attention
• Development of a practical strategy aligned with your objectives

Our guidance is always forthright and realistic, focused on achievable outcomes rather than unrealistic promises.

Implementation and Resolution

We then assist with executing the developed strategy, whether that involves:

Negotiating improved terms with the employer or their counsel

Preparing formal claims when necessary

Drafting or revising severance documents to ensure proper protection

Providing ongoing support through the resolution process

Throughout this process, we maintain clear communication and respond promptly to developments, ensuring you're never left wondering about the status of your matter.

Factors Affecting Severance Entitlements

Severance calculations involve numerous factors beyond simple formulas. Courts consider various elements when determining appropriate notice periods:

• Length of service: Generally, longer service results in greater entitlements
• Age: Older employees typically receive longer notice periods due to re-employment challenges
• Character of employment: More specialized or senior positions often warrant longer notice
• Availability of similar employment: Limited job markets may increase notice requirements
• Inducement: If you were recruited from secure employment, this may increase entitlements
• Employment contract terms: Valid termination provisions may limit common law entitlements

Our assessment considers these factors in the context of current case law to provide accurate guidance on reasonable expectations.

Why Choose Belsito Law for Severance Matters

Severance negotiations require legal representation that combines technical expertise with practical judgment. Belsito Law offers distinct advantages:

Balanced Perspective

Our experience representing both employees and employers provides valuable insight into likely arguments, counter-strategies, and reasonable settlement parameters. This balanced perspective helps develop more effective approaches regardless of which side you're on.

Litigation Expertise

As dedicated litigators, we bring courtroom-tested advocacy skills to severance negotiations. Our understanding of how judges approach these matters informs our negotiation strategy and strengthens our credibility when discussing potential outcomes.

Cost-Effective Representation

We deliver sophisticated legal guidance without downtown Toronto rates. Our Richmond Hill location allows us to provide premium representation with greater efficiency and accessibility for clients throughout the region.

Practical, Results-Focused Approach

We focus on achieving practical results that address your specific priorities rather than pursuing unnecessarily combative or prolonged processes. This approach typically produces better outcomes while controlling legal costs.

Contact Belsito Law for Severance Agreement Assistance

Whether you've received a severance offer requiring review or need to develop appropriate packages for your business, experienced legal guidance is essential. At Belsito Law, we provide the strategic advice and effective representation needed to navigate these important transitions.

Serving clients throughout Richmond Hill, North York, Woodbridge, Markham, and surrounding areas, our litigation team offers the expertise needed to protect your interests during employment transitions.

To schedule a consultation about your severance matter, please call us at 905-762-1511 or use our online contact form.