COLUMN: What to do when offered a severance package 

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Employers sometimes offer a “severance” or “termination package” to an employee when they terminate the employment relationship.

Unfortunately, many employees are uninformed about the dismissal process and have misconceptions about their entitlements. This causes them to accept a sub-par severance package

To maximize your severance package, take care to avoid the following pitfalls. 

Do not accept the employer’s initial severance package and do not sign any related paperwork such as a “Release.” At the time of termination, most employers offer less than the actual value of the dismissal because they know many employees will immediately accept it and the employer will save money. 

A severance package is usually negotiable. If you sign a Release, you are entering into an agreement that eliminates your right to seek additional compensation.

Do not rely on the employer for advice about the severance package and treat information provided by the employer with a healthy dose of skepticism. Remember that management works for the employer and represents their interests. 

It is common for the employer to frame the severance package in a misleading manner. For example, the employer may say the severance package “exceeds” statutory entitlements or that it provides more than required under the employment contract.

Do not make a hasty decision to accept a severance package based on feelings of urgency about your circumstances.

Most terminated workers qualify for Employment Insurance (EI) and it will offset some of the lost income and cover basic necessities like groceries and rent. The employer does not control whether you receive EI. 

If the employer unlawfully miscodes your Record of Employment you can challenge it with Service Canada. 

Do not assume that a low salary automatically means you are only entitled to a small severance package. There are many factors to consider when determining an appropriate severance package.

In some instances, despite earning a low income, older long-term employees can be entitled to relatively large severance packages. 

In other cases, such as early dismissal from a fixed-term contract, short-term employees may also be entitled to larger severance packages. 

Job loss is a highly stressful event that triggers uncertainty and difficult emotions. It is important to ensure that you are clearly and thoroughly informed about your entitlements before you accept a severance package.

If you are presented with a severance package, we recommend that you immediately request an extension to any deadlines and seek legal advice before entering into an agreement. 

Chatham-Kent Legal Clinic provides legal advice on employment law matters, including severance packages. If your case has merit and your family income is low, then we may be able to represent you.

If your family income is not low enough to qualify for our services, we will refer you to private bar lawyers who do employment law.

Travis McKay, CKLC Employment Law Lawyer (www.cklc.ca, 519-351-6771)

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