Severance is the most misunderstood number in employment law, largely because the two countries answer the basic question oppositely. In Canada, dismissed employees are generally owed termination pay — statutory minimums plus, for most, common-law reasonable notice that can dwarf them. In the US, severance is generally not legally required at all — it is a contractual exchange, typically money for a release of claims, governed by policy and leverage. In both countries the first offer is an opening position built for quick signatures, and in both, the release you sign is permanent. Those two facts alone justify the hour of review this guide argues for.
Canada: floor, ceiling, and the space between
Canadian entitlements stack in layers. The statutory floor: employment-standards termination pay, commonly one week per year of service capped around eight weeks, plus — in Ontario, for longer-service employees of large-payroll employers — statutory severance pay on top, and equivalents under the federal code for federally regulated workers. The common-law ceiling: unless an enforceable contract clause limits you to the minimums, courts award reasonable notice based on age, service, role, and the job market — routinely several months, and for long-service senior employees a year or more. The space between floor and ceiling is where most severance negotiations live, because employers' first offers commonly sit near the floor while entitlements sit far above it. The pivotal document is the employment contract: termination clauses that fail legal requirements (and courts strike them regularly — the law here has repeatedly shifted against poorly drafted clauses) revive the full common-law entitlement, which is why a lawyer's first question is always "send me the contract."
The US: no entitlement, real leverage anyway
At-will employment means no general severance requirement — but that is the beginning of the analysis, not the end. Severance appears anyway through: company policies and handbooks (which can create enforceable expectations), employment agreements and executive packages, the WARN Act's 60-day notice requirement for covered mass layoffs and closings (with state mini-WARN laws that reach further), and — most importantly — the release exchange: employers pay severance to buy certainty against claims, which means the value of your severance tracks the credibility of your potential claims. Discrimination or retaliation exposure, unpaid wages or overtime, contract breaches — each raises the price of your signature. Special rules protect older workers: releases of age-discrimination claims require specific disclosures and a 21-day consideration period plus 7-day revocation window under the OWBPA, which is also a practical gift — it guarantees time for review that every dismissed employee should take regardless of age.
Reading a package: the checklist beyond the headline number
- The money: how many weeks/months, lump sum or salary continuance (continuance may end early on re-employment — check the clawback)
- Benefits: how long health/dental continue; what happens to bonuses earned or prorated, commissions in the pipeline, vacation accrued
- Equity and pension: vesting treatment of options/RSUs, pension contributions through the notice period — often the largest overlooked items
- The release: what claims you're giving up (all of them, usually), plus non-disparagement, confidentiality, and any new restrictive covenants smuggled in
- References and departure narrative: an agreed reference letter and internal announcement cost the employer nothing and matter to your search
The overlooked items are where reviews pay for themselves: a package that looks like "twelve weeks" often silently zeroes a bonus that was mostly earned, or forfeits equity a proper counter would have preserved. Nothing on this list is exotic — it is simply invisible to someone reading their first severance letter under stress, which is the state these letters are designed to be read in.
Negotiation: how it actually goes
The process is calmer than people fear. You (or counsel) respond within the offer's window — asking for more time is routine and almost always granted — with a counter grounded in specifics: in Canada, the gap between the offer and a realistic reasonable-notice range for your age, service, and role; in the US, the claims the release would extinguish and what they'd cost to defend; in both, the concrete items the checklist surfaced. Employers expect counters; the first offer priced them in. Most matters resolve in one or two rounds without any filing, because both sides prefer certainty — the employer buys finality, the employee funds the job search. Where it doesn't resolve, the claim itself remains available within its deadlines. Two behaviours protect your position throughout: keep every communication professional (angry emails become exhibits), and never work out the package's logic aloud with HR — the negotiation is with the company, and the friendly exit interview is not your advocate.
The mistakes that cost the most, ranked
Ranked by observed expense: Signing same-day. Releases are permanent, offers rarely shrink upon review, and the pressure to sign now is itself information. Skipping the consultation. Employment lawyers commonly review packages for modest flat fees or contingent arrangements, and in Canada the review regularly identifies entitlements multiples of the offer; treat the fee as insurance priced against your severance, not your salary. Missing the deadlines that keep leverage alive — short human-rights and agency windows in both countries. Resigning preemptively to escape a bad situation without advice, converting entitlements to zero. And narrating on social media, which has cheapened more settlements than any opposing lawyer ever did. The quiet good news underneath all of it: severance is one of the few legal negotiations where an hour of professional review, taken before the signature, reliably changes the outcome — and where the other side fully expects you to take it.
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