Saad Mirza
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Unfairly treated or fired at work?
April 6, 2025
How to Negotiate a Higher Severance Package
Losing a job is never easy, but understanding your rights and taking a proactive approach can make all the difference. Severance pay, which serves as compensation for employees who are let go, can provide a crucial financial cushion during a challenging transition.
However, many people accept the first offer they receive, unaware that they may be entitled to much more. We’ve helped many clients secure better severance packages, ensuring they leave their roles with dignity and fair compensation. Here’s how you can do the same.
What Is Severance Pay and Why Negotiate?
Severance pay is compensation offered to employees when their employment is terminated without cause. It often includes a mix of financial payments, extended benefits, and other perks like outplacement services or references.
While some employers offer severance out of goodwill, others do so to meet legal obligations or avoid potential disputes. Negotiating your severance package is critical because initial offers are often far below what you’re entitled to under Canadian law or common law principles.
For example, one of our clients was initially offered just eight weeks of severance after 15 years of service. After reviewing their case and negotiating on their behalf, we secured them 18 months’ pay—an outcome that better reflected their tenure, age, and difficulty finding comparable work.
Understanding Your Rights
Canadian severance laws vary by province but generally aim to ensure fair treatment for terminated employees. In Ontario, for instance, employees with more than five years of service at companies with a global payroll exceeding $2.5 million are entitled to statutory severance pay in addition to notice or pay in lieu of notice.
However, statutory minimums often fall short of what you might be entitled to under common law. Key factors influencing severance include:
• Length of service
• Age at termination
• Position within the company
• The time it may take to find comparable employment
Employers sometimes use contracts to limit severance entitlements through restrictive termination clauses. If you suspect this applies to you, consulting an employment lawyer is essential.
Reviewing Your Severance Offer
Before signing any agreement, take the time to thoroughly review your severance package. Common pitfalls include:
• Restrictive clauses: Non-compete or non-solicitation clauses may limit your ability to work in your field for months or even years.
• Confidentiality provisions: These should not prevent you from discussing your termination with legal advisors or close family.
• Lowball offers: Employers often present offers with tight deadlines to pressure employees into accepting less than they deserve.
One client we worked with was presented with a non-compete clause that would have barred them from working in their industry for two years—a condition that would have been devastating for their career. After negotiations, we had the clause removed entirely.
Building a Strong Negotiation Strategy
Preparation is key when negotiating your severance package. Start by researching what others in similar roles have received and identifying leverage points such as:
• Your tenure and performance history
• The company’s policies or past practices
• Any vulnerabilities in the employer’s initial offer
Timing also matters. For instance, if your termination coincides with company downsizing or restructuring, employers may be more inclined to negotiate favorable terms.
Key Points to Negotiate
While most people focus on increasing the monetary payout, there are several other components worth negotiating:
• Extended benefits: Health insurance and other benefits can be critical during your job search.
• Positive reference letters: These can significantly impact your future job prospects.
• Non-compete clauses: Modifying or removing these restrictions can give you greater freedom in seeking new opportunities.
In one case we handled, our client successfully negotiated an additional three months of health benefits
coverage alongside a significant increase in their severance payout.
Presenting Your Case Effectively
When negotiating with your employer, confidence and professionalism are essential. Use clear legal and financial reasoning to support your requests. Highlight your contributions to the company and explain why the proposed terms fall short of what is fair.
If negotiations stall or become contentious, it may be time to involve a lawyer. We’ve seen firsthand how legal representation can shift the balance of power in severance discussions.
Next Steps
If your employer refuses to budge on their offer, you still have options:
1. File a complaint: Provincial employment standards offices can help enforce statutory entitlements.
2. Pursue legal action: Common law claims often result in significantly higher payouts than statutory minimums.
3. Evaluate next steps: Sometimes accepting an offer—even if it’s not ideal—may be the best course of action depending on your circumstances.
One client came to us after their employer withdrew an initial offer following failed negotiations. By pursuing legal action, we secured them double the original amount—a result that underscored the importance of standing firm.
Negotiating a higher severance package isn’t just about maximizing financial compensation—it’s about ensuring fairness and protecting your future career prospects.
Author: Saad Mirza
I’m Saad Mirza, the founder of Thrive Law, a employment law firm dedicated to helping employees across Ontario navigate challenging job terminations and workplace issues.