Severance Pay & Termination Packages

Rudner MacDonald discuss severance pay in Ontario

Unless there is just cause for dismissal, employers in Canada must provide clear and unequivocal written notice of termination to an employee in order to sever the employment relationship. While there is no simple way to calculate an employee’s severance pay or termination package, an employer must meet its obligations pursuant to Employment Standards legislation, and, unless an enforceable contract says otherwise, provide “reasonable notice” pursuant to the common law. Many employers fail to realize that during the notice period, all forms of compensation are to continue; in other words, the severance pay cannot simply continue the employee’s base salary but cut off commissions, bonuses, and disability benefits.

Rudner MacDonald LLP will work with you in order to explain your options when it comes to terminating the employment relationship and selecting the appropriate severance pay and termination package. While employees often expect a termination “package”, it is an employer’s right to provide working notice of dismissal, salary and benefit continuance, a lump sum payment, or a combination thereof. It is also possible to include a “clawback” provision that reduces your obligations if the employee finds a new job.

We can help you to understand the pros and cons of each option so you can determine what will be most beneficial for your organization.



We retained Natalie MacDonald five years ago to assist us on a matter when one of our former employees had decided to sue us. Natalie’s superior knowledge of the law, and her persuasive arguments enabled us to resolve the matter quickly, without having to spend thousands of dollars in litigation. Throughout the years, Natalie’s guidance and expertise has navigated our company through difficult situations. Her vast knowledge of employment law has enabled us to find practical solutions on a cost- effective basis, which is particularly appreciated. Natalie is a genuine pleasure to work with, and any company that does not have her as their employment law counsel is definitely missing out.

James Cameron
President
Cameron & Associates Insurance Consultants

Stuart was very instrumental in providing guiding advice pertaining to a severance package. His thought process and calm demeanor lessened anxiety levels. His knowledge of labour laws pertaining to severance/termination issues was greatly appreciated. He was a pleasure to work with and I would highly recommend him.

Ralph Guttman
Manager, Client Taxation
Cannaccord Financial