Negotiating a severance package starts with understanding what you have been offered and whether it reflects your legal entitlements. Before responding to your employer, understand how severance is assessed, what factors affect your entitlement, and whether the offer leaves room for negotiation.
Many employees assume the first severance offer they receive is final. That is not always the case. Depending on the circumstances, an employee may be entitled to more compensation than what was initially offered.
Whether negotiation makes sense depends on factors such as your age, length of service, position, compensation, and the availability of comparable employment. These are some of the same factors Ontario courts consider when determining an employee’s reasonable notice entitlement under common law.
If you have recently been fired, understanding how severance negotiations work can help you decide whether the offer should be accepted, negotiated, or reviewed further.
Can I Ask for More Severance Pay?
Yes.
Employees who are dismissed without cause can often ask for more severance pay than what was initially offered. Simply receiving a severance package does not mean the employer’s obligations have necessarily been satisfied.
A common reason is the difference between minimum entitlements under Ontario’s Employment Standards Act (“ESA“) and potential entitlements under common law. The ESA establishes minimum standards for notice of termination, termination pay, and, in some cases, statutory severance pay. Employees may have additional rights under Ontario common law depending on their circumstances.
When Ontario courts assess reasonable notice, they do not rely on a fixed formula. Instead, they consider several factors, including the employee’s age, length of service, position, and the availability of similar employment opportunities. These considerations are commonly known as the Bardal factors.
For that reason, many employees obtain legal advice before accepting a severance offer. A severance package that appears reasonable at first glance may not fully reflect an employee’s legal entitlements.
Severance packages are often negotiable, particularly where the offer does not reflect an employee’s legal entitlements.
Asking for more severance pay is not unusual. In many cases, it is a normal part of the process following a dismissal.
How to Negotiate More Severance Pay
Effective severance negotiations begin with understanding your rights.
Many employees make the mistake of focusing exclusively on the amount being offered. The better approach is to first understand how that amount was determined. Before responding to your employer, review the severance package carefully and consider whether it reflects your individual circumstances.
This includes reviewing any employment agreement, termination letter, bonus plan, commission structure, benefits package, stock option plan, or other documents that may affect your compensation. You should also review any release included with the package. A release is a legal document that generally prevents you from pursuing future claims against your employer once it has been signed.
Pay close attention to deadlines. Employers often provide a specific period for reviewing the offer. While those deadlines are sometimes flexible, you should not assume they can be ignored. If you need additional time to obtain legal advice, raise that issue promptly.
The strongest negotiating positions are usually grounded in facts, not frustration. Losing your job can be frustrating, particularly if the termination was unexpected. However, severance discussions tend to be more productive when they focus on legal entitlements, employment history, compensation, and other relevant factors rather than personal grievances.
In some cases, concerns about the offer relate to common law notice. In others, the discussion may involve bonuses, commissions, benefits continuation, equity compensation, or restrictive contractual provisions. The issues that arise vary from one employee to another.
Once those issues have been identified, negotiations typically begin by communicating those concerns to the employer and explaining why additional compensation or changes to certain terms may be appropriate. Depending on the circumstances, an employer may revise the offer, request additional information, or maintain its original position.
Employees may also benefit from obtaining advice about their severance package before signing a release or accepting compensation. Once a package has been accepted, it may be difficult to revisit the terms later.
Negotiation is about ensuring the offer accurately reflects your legal rights and circumstances.
Is It Worth Negotiating a Severance Package?
Often, yes.
Whether negotiation is worthwhile depends on the gap between the offer being made and the compensation you may be entitled to receive. In some situations, the employer’s initial offer may already be reasonable. In others, there may be legitimate grounds to request additional compensation or changes to specific terms.
Severance negotiations are not always limited to salary continuation or lump-sum payments.
Other issues may have significant value depending on your circumstances. These can include the continuation of benefits, treatment of bonuses, commissions, stock options, pension considerations, outplacement support, or the wording of a reference letter. In some cases, resolving these issues can be just as important as negotiating compensation.
Negotiation may also provide an opportunity to address issues that were not fully considered in the original offer, including compensation, benefits, bonuses, or other employment-related terms.
That does not mean negotiation is always necessary. Some employees receive strong offers from the outset. Others may decide that the potential benefits of negotiation do not justify the additional time or expense involved.
Make an informed decision rather than assuming the first offer should automatically be accepted. In some cases, employees may have grounds to pursue further compensation after termination if the severance package does not reflect their legal entitlements.
Can Negotiating Severance Backfire?
Usually not.
Employers generally expect that some employees will ask questions about their severance package or seek legal advice before signing. Simply requesting additional compensation does not typically create legal problems.
Mistakes during the negotiation process can create challenges.
One common mistake is signing documents before fully understanding their consequences. Once a release has been signed, it may be difficult or impossible to pursue additional compensation later. Before signing a severance agreement, understand what rights you may be giving up, particularly if you have not yet obtained legal advice.
Another mistake is allowing deadlines to pass without taking action. While some employers are willing to extend review periods, others may not be. Ignoring correspondence or delaying unnecessarily can complicate negotiations.
Unrealistic expectations can also become an obstacle. Every case turns on its own facts. A friend, colleague, or online discussion may have involved very different circumstances. Comparing severance packages without understanding the legal and factual differences between cases is rarely helpful.
How negotiations are conducted can affect the outcome. Communications that are professional, respectful, and supported by relevant facts are generally more effective than emotional or confrontational exchanges.
Employees should not assume the first offer is necessarily correct or that additional compensation is automatically available. The purpose of negotiation is to understand the situation properly and make informed decisions based on accurate legal advice.
The first severance offer is not always the final offer. At the same time, negotiation is not a guarantee of a particular outcome. Understanding your rights, reviewing the package carefully, and speaking with an employment lawyer can help you determine whether negotiation is worth pursuing and how best to approach the process.
Legal Disclaimer: This post is general information only. Nothing in it constitutes legal advice, and nothing here applies to your specific situation. Every case turns on its own facts, and the only way we can advise you on yours is through a proper consultation and engagement. Reading this post does not create a lawyer-client relationship with Sultan Lawyers. If you have questions about your situation, contact us directly.
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