By: Stephanie McDonald and Baljinder (Bal) Singh Tiwana
Losing your job is stressful, and the severance process can feel overwhelming—especially when employers use tactics designed to minimize what they pay. In Ontario, many employees accept lowball offers simply because they don’t know their rights. Understanding the strategies employers rely on—and the strength of your legal position—can dramatically change your outcome.
Why Employers Make Lowball Offers
In Ontario, employers often open negotiations with a deliberately low severance offer. It’s a cost-saving strategy: secure a quick settlement before the employee gets legal advice. For employees, accepting that first number can mean walking away from thousands of dollars.
These early offers are almost always made on a “without prejudice” basis. This means:
- The offer cannot be shown to a Court if the matter proceeds to trial
- Employers can therefore make unfair, and unreasonable offers, without risk of it being later used against them
- This protection stems from settlement privilege, a common-law rule that shields genuine settlement discussions from being used as evidence in Court. The purpose is to encourage early, efficient resolution of disputes, reducing strain on the Court system
But the downside is obvious: Your first offer is almost never fair.
This is why early legal advice is essential. A lawyer can assess whether the proposal reflects your true entitlements and prevents you from accepting a settlement that may leave thousands of dollars in your former employer’s pocket.
Most Severance Packages Can Be Improved
In practice, most Ontario severance packages can be significantly improved with proper legal review. Employees should be extremely cautious before signing anything.
A critical area is bonus compensation. Many employees are entitled to:
- Bonuses already earned before the termination date, and
- Bonuses they would reasonably have received during the notice period
If bonuses form a regular part of your pay, they often must be included in your severance.
You must also consider your reasonable notice entitlements. Many employees qualify for common-law notice, which is frequently far higher than the minimum entitlements under the Employment Standards Act (ESA). With legal support, severance packages can often be negotiated to fully reflect these rights.
Have a Lawyer Review Your Termination Clause
Your termination clause may be the single most important part of your employment contract. Many clauses attempt to limit employees to ESA minimums—amounts that can be dramatically lower than common-law entitlements.
The good news: Many termination clauses are unenforceable.
A clause can fail for several reasons, including:
- Ambiguity
- Any provision that breaches, or has the potential to breach, the ESA
When a termination clause is unenforceable, your entitlement defaults to common-law reasonable notice, which typically gives you much greater entitlements.
Your leverage grows even further when Courts consider factors such as age, length of service, seniority, and the difficulty of finding comparable work. An unenforceable clause can shift negotiations sharply in your favour.
Conclusion
Knowledge is leverage. When you understand your rights, you negotiate from a position of strength. The first offer is almost never the best offer—and you may be owed far more than you thought.
At Workplace Sage Legal, we can review your employment contract, assess your termination clause, and determine whether you qualify for common-law notice. Don’t settle for less than the law entitles you to.
If you don’t ask, you don’t get—and we’ll make sure you ask for everything you’re owed. Book a consultation today.
DISCLAIMER: This article/blog is provided for educational/informational purposes only. The views expressed are solely those of the author(s) and should not be attributed to any other party not listed as the author(s).
While reasonable efforts have been made to ensure the accuracy of the content provided, it does not constitute legal advice. Prior to relying on any aspect of this article, you should consult with a suitably qualified legal professional promptly in your relevant jurisdiction, to obtain advice tailored to your individual circumstances
Nothing in this article should be interpreted as forming a solicitor-client relationship or construed as a solicitation for legal services.
