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Employment & Labour

How important are the deadlines in your severance package?

By Doug MacLeod

You are terminated from your job and your employer offers you a severance package. They give you one week to sign the offer and ask that you sign a full and final release confirming that there will be no further payments. Are you obligated to sign and return the offer within a week?

We often receive this question from recently terminated employees who are scrambling to find legal advice within a few days while also dealing with the stress of their termination.

If we are first contacted close to the deadline we often advise employees to simply request an extension from their employer. In our experience, the vast majority of employers will consent to this request. It is important to remember that it is in your employer’s best interest to reach a reasonable deal with you. Just because you do not sign and accept their severance package before the deadline, does not make their legal obligations to you disappear. Further, the deadline is only important if you are accepting the offer.

You should have your severance package reviewed by a lawyer before accepting it because, in many cases, it is possible to negotiate a better severance package. It is not unusual for employers to offer severance packages that barely meet the minimum standards set out in the Employment Standards Act. You may be entitled to considerably more pay than the minimum standard. Even if have signed an employment contract with a legally enforceable termination clause, it is possible that you could be entitled to a large severance package because of conduct that occurred during your employment such as harassment and discrimination. Unless you are certain that their severance package is fair you should not sign a severance offer and release until you have consulted with a lawyer.

At least one Ontario judge has unfavourably viewed stringent deadlines requiring an employee to sign a severance package and release. In this case, the court found that even though an employee had signed a “release” shortly after his termination, the release was not binding. The court found that the employee had not been given sufficient time to consider the offer. Ultimately the court awarded him significantly more notice than his employer had offered him.

Lessons for employees:

  1. If you need more time to obtain legal advice ask your employer for an extension to sign the severance package, particularly if you are given less than five business days to consider the settlement offer.
  2. Always consider having your severance package reviewed by a lawyer because it is possible you could be entitled to a greater notice period. Especially if you are a long service employee. Remember: you don’t know what you don’t know.

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