7 Signs Your Severance Offer Is Too Low
How to spot an undervalued severance
offer in Canada
When you receive a severance package, it often arrives at one of the most stressful moments of your career. You’re managing uncertainty, financial pressure, and sometimes shock. Many employees assume the number presented must be correct because it looks formal and time sensitive.
But in Canada, severance isn’t just a simple calculation. Employers must meet minimum standards under provincial legislation, yet common law often entitles employees to significantly more. If you don’t know what to look for, you could sign away months of additional compensation without realizing it.
Below are seven clear signs your severance package may be lower than it should be.
1. The offer only matches minimum employment standards
Every province sets minimum termination and severance pay requirements. For example, the Employment Standards Act outlined by the Government of Ontario establishes baseline notice periods and statutory severance in certain cases. These amounts are legal minimums, not full entitlements.
If your offer mirrors only the statutory minimum weeks of pay, that’s your first red flag. Canadian courts frequently award substantially more under common law reasonable notice principles.
Minimum standards protect employers from violating legislation. They don’t necessarily reflect what you’re owed.
2. Your employment contract contains a questionable termination clause
Many employers rely on termination clauses in employment contracts to limit severance to statutory minimums. However, Canadian courts have repeatedly struck down poorly drafted clauses that don’t comply with employment legislation.
The Supreme Court of Canada in Machtinger v HOJ Industries Ltd confirmed that non compliant termination clauses can be invalid, meaning common law notice applies instead. When that happens, severance entitlement can increase dramatically.
If your offer is based solely on a contract clause that hasn’t been reviewed carefully, there may be room to challenge it.
3. Your age and job market realities weren’t considered
Common law reasonable notice is not a flat formula. Courts consider factors such as age, length of service, position, and availability of similar employment. Older employees or those in specialized roles often require longer notice periods because comparable positions can take longer to secure.
According to labour market data published by Statistics Canada, re employment timelines vary significantly depending on industry and economic conditions. If your severance package doesn’t reflect realistic job search timelines in your field, it may undervalue your entitlement.
A package that ignores market conditions may not reflect your true notice period.
4. Bonuses, commissions, or incentives are excluded
If a significant portion of your compensation came from bonuses, commissions, or incentive plans, those amounts may need to be included during the reasonable notice period.
Employers sometimes calculate severance based only on base salary. However, courts frequently assess total compensation, not just salary, when determining common law damages.
If your offer excludes recent bonuses, earned commissions, or long term incentives without clear justification, that’s another sign it may be lower than it should be.
5. You were given a very short deadline to sign
A 48 hour deadline is common in severance letters. While employers can set timelines, high pressure deadlines can discourage employees from seeking advice or fully assessing their rights.
The Canadian Bar Association has publicly advised that employees should review severance agreements carefully before signing, especially when release clauses are involved. Once signed, those releases typically waive your right to pursue additional claims.
If the offer emphasizes urgency over explanation, that pressure may be designed to limit negotiation.
6. The offer doesn’t address benefits continuation properly
Severance isn’t just about salary. Benefits continuation during the notice period can be significant, especially if you rely on extended health coverage, disability insurance, or pension contributions.
If your package cuts off benefits immediately or provides only minimum continuation without considering a longer common law notice period, the financial impact could be substantial.
A thorough severance review should consider the total value of compensation, not just the lump sum payment.
7. The language suggests the offer is generous or non negotiable
Some severance letters frame the offer as above average, enhanced, or final. While it may be higher than statutory minimums, that doesn’t automatically mean it reflects your full entitlement.
In Canada, negotiation is common in termination situations. Reporting from The Globe and Mail consistently notes that employment lawyers advise employees not to assume first offers are final. Employers often expect some degree of negotiation.
If the wording attempts to discourage discussion without explaining how the amount was calculated, that’s worth examining closely.
Why these signs matter more than you think
Severance is designed to provide income during the period it should reasonably take you to find comparable employment. The gap between statutory minimums and common law reasonable notice can be significant, especially for long service or senior employees.
The Government of Canada outlines federal labour standards for certain sectors, but most employees fall under provincial rules combined with common law principles. That layered system creates complexity, and complexity often leads to underestimation.
When employees don’t know their potential entitlement, they’re more likely to accept the first number presented.
What to do if you recognize these signs
If one or more of these signs apply to your situation, pause before signing anything.
Start by reviewing:
Your length of service
Your age
Your position and responsibilities
Your total compensation including bonuses
Current hiring conditions in your industry
Then assess whether the offer reasonably reflects the time it may take you to secure comparable employment.
Negotiating doesn’t have to be confrontational. It can be structured, professional, and grounded in objective factors. Many employers adjust offers when presented with reasonable arguments tied to common law principles.
The key is understanding that a severance package is often a starting point, not a final calculation.
Protecting your financial transition in Canada
Losing a job is disruptive enough without compounding the impact by accepting less than you may be entitled to. Severance can represent months of income, continued benefits, and financial breathing room during your transition.
Recognizing the warning signs of an undervalued package empowers you to respond strategically rather than emotionally. You don’t need to assume bad intent from your employer. You do need to ensure the offer aligns with your legal position.
When you approach severance with clarity and preparation, you shift from reacting to negotiating.
That shift can make a meaningful difference in your next chapter.
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Frequently asked questions about low severance offers
How do I know if my severance is only the minimum required by law?
If the number of weeks offered matches exactly what provincial employment standards require based on your years of service, it’s likely a minimum standard offer. Minimums are legal floors. Common law entitlements are often higher depending on your circumstances.
Can I negotiate severance without hiring a lawyer?
Yes. Many employees negotiate directly and professionally. While legal advice can be helpful, negotiation itself is common in Canada. The key is understanding the factors courts use to assess reasonable notice and framing your request clearly.
What happens if I sign and later realize it was too low?
Once you sign a release, you typically waive your right to pursue additional claims related to your termination. That’s why reviewing the agreement carefully before signing is critical.
Does age really affect severance entitlement?
Yes. Courts consider age because older employees may face longer job searches. Age is one of several factors used to determine reasonable notice under common law.
Is it risky to push back on a severance offer?
In most cases, it’s not risky if handled professionally. Employers often expect some negotiation. A respectful counterproposal supported by objective factors is standard practice in Canadian termination situations.
