Are you an employee who has been recently dismissed and has been handed a “termination package” from their employer?

This blog investigates the issue of severance and termination packages received from an employer when an employee has been fired or dismissed. Specifically, we look at what exactly is a severance or termination package, what is the difference between termination and severance pay, what are the statutory minimum notice requirements and why they are different than what the common law requires in Ontario and why negotiation with the assistance of an employment lawyer can be crucial in these situations.

What is a Termination Package? Is a Termination Package the Same as a Severance Package?

A “termination package” is certain documentation that an employee receives upon dismissal, and these documents can go by various names. Sometimes an employee’s dismissal culminates in a letter which may include other documents from the employer that set out how the employee will be dismissed and what entitlements the employee may receive upon dismissal. This letter is called a “termination letter.” The letter and other termination documents may also be called a “termination package.” It may also be called a “severance offer” or “termination offer.” However, regardless of the terminology, these documents are generally the same thing and include the same type of information.

To remind our readers, we have recently written a blog post about a very similar topic in the context of Rogers offering employees “voluntary departure” packages or “exit” offers as they are attempting to reduce their workforce in an effort to restructure the company. Readers to this blog can find that blog entitled “Rogers Offers Employees Buy Out Packages or Voluntary Departure Packages to Restructure and Cut Spending” on our website.

Termination Pay vs. Severance Pay

One of the first things an employment lawyer looks for when they review a severance or termination package is to see if the employer has properly accounted for termination pay, whether there is any severance pay owing and whether the severance pay is properly accounted for, whether the employee is owed any vacation pay or benefits, etc.

Termination pay is simply monetary compensation paid to the employee in lieu of notice of the termination. Sometimes the employer will provide no notice to the employee or less notice than what the employee should have received from the employer. Termination pay is calculated statutorily and at common law.

Termination pay and severance pay are not the same. This is one of the most common misconceptions by the public and individuals often discuss “severance pay” and “termination pay” interchangeably as if those terms are equivalent. The confusion also arises when the word “severance package” is thrown around colloquially. However, with regard to severance pay, the employee is only entitled to severance pay compensation if they meet certain criteria that are set out statutorily. Under Ontario’s Employment Standards Act, 2000 (“ESA”), the employee must have worked for the employer for five (5) or more years. The second criterion is that the employer must have a payroll of at least $2.5 million.  An employee may also be entitled to severance pay if the employee was subjected to a mass termination in accordance with the ESA. If those criteria are not met, then the employee will not be able to obtain “severance pay.”

For more information about this topic, please review our blog “Termination Pay in Ontario: 2026 Guide to Rights & Entitlements“.

Statutory Minimum Notice Requirements vs. Common Law Notice

An employment lawyer will be able to help an employee to ascertain whether the employee’s offered termination package contains adequate notice or pay in lieu of that notice.

Ontario’s ESA sets out what the employee’s minimum notice period should be statutorily. Again, ESA entitlements are minimum entitlements and an employee’s notice period owed under the ESA is based only on how long they have been working for the employer (one week of notice for every year that the employee worked for the employer). An employee may be entitled to a significantly longer notice period under the common law.

The amount of common law notice is determined by using a variety of factors. These factors include:

• the employee’s age;
• length of service;
• character of employment (such as the employee’s job description or position); and
• the availability of similar employment, having regard to the experience, training and qualifications of the employee.

Ontario courts will award an employee with pay in lieu of reasonable notice up to 24 months’ common law notice depending on the various factors we have mentioned above. In exceptional circumstances, Ontario courts can award notice periods to dismissed employees of above 24 months.

Negotiation and Severance or Termination Packages

Employment lawyers commonly assist employees by negotiating with their employer to obtain the highest compensation possible upon dismissal. This often entails helping an employee negotiate a termination package with more compensation than what was originally handed to an employee. However, how to negotiate, when to negotiate and what to demand or request can be complex. There may be a clear answer as to what the employee should do with respect to the offered severance or termination package offered, or the answer may be more nuanced depending on what the facts are and what the employee’s own risk tolerance is. For example, there can be several issues that exist that the employee does not realize are issues that can be negotiated.

Here are a few of those issues:

1. Should the employee negotiate for a salary continuance or a lump sum payment?
2. Has the termination package included bonuses, commission payments or benefits?
3. What about unused vacation pay?
4. Are there any stock options that the employee may have?
5. What if the employee has been subjected to workplace harassment or discrimination?
6. What about getting a reference letter?
7. Is there a release? If so, what does it cover?

The key point that readers should get from this blog is that employees should never accept a termination or severance package offered by their former employer right away or “as is” without first having that package reviewed by an employment lawyer.

How Zeilikman Law Can Help

Most employees should approach an employment lawyer to review their termination or severance package offered by their employer upon dismissal. Employment lawyers, like the employment lawyers at Zeilikman Law, can help ensure that the employee’s legal rights are protected upon termination so that the employee gets the compensation that they are owed.

For more information related to termination and severance packages and other related important employment law issues, please review our blogs entitled:

• Learn Why You Should ALWAYS Get an Employment Lawyer to Review Your Termination or Severance Package
• 4 Practical Steps to Take When You Receive a Termination Letter from Your Employer
• You received a termination letter from your employer stating that you are dismissed. So, what do you do now?

Failing to reach out to an employment lawyer may result in the employee not obtaining their full legal entitlements to things like severance or termination pay. Zeilikman Law can be contacted at (905) 417-2227 or online here to schedule a confidential consultation with one of Zeilikman Law’s employment lawyers.