§ Severance guide
Sequential guide · Ontario · Employees & executives
From noticeto signature, in order.
A sequential guide to reviewing a severance package — written for the executive, professional, or individual contributor who has just received one or expects to. Six stages, in the order they actually run.
- Stages
- 6
- Review from
- $750
- Consultation
- $450
§ 00 — Framing
The package is a starting point.
Most severance packages presented to employees in Ontario are opening offers. The number on the page is rarely the number the employer intends to land at. The work of a severance review is moving from the opening number to a closing number that reflects the employee’s actual position.
This guide walks through the six stages of that work in order. It is general information, not legal advice on any specific package. Acting on a real package requires a consultation that applies the framework to the facts.
§ 01 — Stage 01
Before the conversation.
The most useful work happens before the package is delivered.
Severance conversations rarely arrive without warning. Restructurings, performance discussions, sudden meeting requests with HR, and changes in management often precede them by weeks. The work done in that window is usually the most leveraged.
Three things are worth doing early: gather the documents (offer letter, employment agreement, amendments, bonus and equity plan documents), preserve the personal copy of recent communications, and make a calm, dated note of what is changing in the role. None of this commits to anything — it just preserves position.
§ 02 — Stage 02
Reading the package.
The package collapses to four numbers and a stack of qualitative terms.
Every package, regardless of length, is structured around four numerical anchors: the ESA minimum, the common-law range, the bonus question, and the equity number. They are read first, in that order, because they set the negotiating frame for everything else.
Around those four numbers sit the qualitative terms — the release language, non-disparagement clause, reference terms, benefits continuation, and outplacement support. The qualitative items are negotiated against the negotiating room created by the quantitative position.
§ 03 — Stage 03
Negotiation strategy.
Counter-offers are crafted to advance position, not to send a message.
A counter-offer in writing puts the negotiating frame on paper. It identifies the specific items, gives reasons grounded in the package and the legal context, and asks for specific changes — not a generic ask for more.
Tone matters. The counter-offer is read by the same employer the employee is asking to extend the package — and possibly by the people who will be referenced for future roles. It should be precise, professional, and limited to the items that actually matter.
§ 04 — Stage 04
Settlement structuring.
How the agreement is structured affects what arrives in the bank.
Two settlements with the same headline number can produce very different outcomes once timing, allocation, benefits continuation, and tax treatment are factored in. Lump-sum versus salary continuance has implications for both cash flow and taxation.
Allocation between general damages, retiring allowance, and other categories where supportable on the facts can have meaningful tax consequences. This is read with a tax adviser if the numbers warrant — Northline does not provide tax advice, but flags where structuring matters.
§ 05 — Stage 05
Tax considerations.
The tax read is parallel to the legal read, not after it.
Severance is generally taxable as employment income, but specific allocations and the use of an RRSP retiring allowance contribution can affect the after-tax result. The mechanics depend on years of service and contribution room.
These are tax questions, not legal ones. A coordinated read with an accountant or tax adviser at the structuring stage produces better outcomes than retrofitting tax planning after signature.
§ 06 — Stage 06
After signing.
The release is the close, not the start of further conversation.
Once the release is signed, the matter is closed for legal purposes. Continued contact with former colleagues, written communication, or social posts about the matter can create new exposure under non-disparagement and confidentiality clauses.
Reference terms negotiated into the agreement are usable. Calling the former employer to ask for an off-script reference is not. The discipline of treating the closed matter as closed is part of preserving the value that was negotiated.
§ 07 — Negotiation order
What gets negotiated, in order.
Notice and severance pay
The headline number first, framed against the common-law range and any enforceable termination clause in the agreement.
Bonus and incentive
Bonus accrual through notice, treatment of pro-rata payments, and discretionary versus formulaic plan language.
Equity and deferred compensation
Vesting position at termination, treatment of unvested grants, post-termination exercise window, and plan acceleration triggers.
Benefits continuation
Health, dental, life and disability coverage during the notice period — paid by the employer or self-funded, with what coverage gaps.
Release language
Scope of the release, carve-outs (statutory entitlements, indemnification rights, pension rights), and the deadline to sign.
Reference and reputation
Agreed reference language, non-disparagement obligations on both sides, and how the departure is communicated internally and externally.
§ 08 — Engagement
Two ways to start.
An executive review consultation is the right entry point for senior packages. A fixed-fee severance review is appropriate when the package is in hand and the work is the negotiation.
Executive Review Consultation
Offer, exit, severance, compensation, or restrictive covenant review with a negotiation view.
- Offer, exit, or severance review
- Compensation and equity read
- Restrictive covenant analysis
- Negotiation view
Severance Review
Package review, legal position summary, and negotiation options.
- Package review
- Legal position summary
- Negotiation options
§ Related
Adjacent work.
§ Apply the framework
Move from a general read to a position on your package.
An executive review consultation applies this framework to the package in front of you — with options, a recommended counter-offer structure, and a clear next step.
Toronto · Ontario