Most people only learn what a severance package is when they’re suddenly handed one.

It usually happens fast: a meeting, a termination letter, a package across the table, and a deadline to sign. You’re told it’s “standard.” You’re told it’s “generous.” You’re told it’s “what we’re required to pay.”

Sometimes that’s true. Often it isn’t.

A severance package is an offer from an employer to end your employment on agreed terms. It commonly includes money, benefits continuation, and written terms about confidentiality, release of claims, and how your employment will be described going forward.

The amount you’re owed depends on the reason for termination, your employment contract, and where you work. In Ontario and across Canada, there is a major difference between minimum statutory entitlements and what you may be owed at common law.

A severance package typically includes:

• Termination pay / pay in lieu of notice (weeks or months of compensation)
• Severance pay (a specific statutory entitlement in some provinces and situations)
• Benefits continuation (extended health/dental, disability, etc.)
• Bonus/commission treatment (pro-rated, included, excluded, or disputed)
• Vacation pay owing
• A release (you give up legal claims in exchange for the package)

Employers and Employees often use the term “severance” to describe the entire bundle, even when legally it’s a mix of different entitlements.

People use “severance” casually, but legally it can mean different things:

• Termination pay (or “notice pay”) is the pay you receive when your employer ends your job without giving working notice.
• Severance pay is a separate entitlement in some jurisdictions, including Ontario, but only if you meet specific criteria.
• Common law reasonable notice (where it applies) can be significantly more than minimum standards.

If you’re trying to figure out “how much is a severance package,” you need to know which bucket you’re in.

No. But many people do.

You may be owed money and benefits even if the employer doesn’t call it a “package.” Where employers get into trouble is when they treat the legal minimum as the end of the conversation especially for long-service employees, older employees, or employees in specialized roles.

A proper severance analysis usually considers:

• Length of service
• Age
• Position/seniority
• Compensation structure (salary, bonus, commission, benefits, allowances)
• Availability of similar work (labour market realities)
• Contract wording (termination clauses can cap or expand entitlements)
• Reason for termination (without cause vs. cause vs. layoff)

The most common mistake we see: employees compare themselves to a friend or coworker. Severance isn’t one-size-fits-all.

It’s a myth that there’s a fixed formula.

Some people receive around a month per year of service in common law outcomes. Some receive less. Some receive more. What matters is the overall circumstances and the legal framework in your province.

In most cases, no.

A severance package almost always includes a release. Once you sign, you may be giving up claims for:

• additional severance
• unpaid bonus/commission
• benefit losses
• disability issues
• human rights claims
• moral damages claims
• other damages

If the offer is fair, a review will confirm it. If it isn’t, early advice can put real money back in your pocket. In our experience most severance packages offered do not provide people their full legal entitlements.

Practical next steps if you’ve been offered severance

1. Don’t panic-sign. Deadlines are often flexible. Employers love to use tactics such as serving a termination package on a Thursday or Friday and requiring it to be signed and returned by early the following week. The idea being that often immediately after termination people are upset and take some time to gather their thoughts, speak with their significant other etc. and they run out of time so they simply sign away their rights.
2. Gather your documents: offer letter, contract, t4, bonus plan, benefit booklet.
3. Write down what was said in the termination meeting while it’s fresh.
4. Get the package reviewed before you accept.

McMackin Law can review severance offers and negotiate improved packages where the offer is below what the law requires or what your circumstances justify.