Executive Employment Lawyer in Ontario: Understanding Severance Packages for Senior Executives

Executive Severance Package Negotiation

Navigating executive terminations requires both legal precision and negotiating finesse. When experienced executive employment lawyers consult with employers or employees about an employment termination involving senior executives, including those with many years of service, it is generally recommended offering a higher range of months of pay in a severance package. This general rule has exceptions, but will typically hold true even if the employee has served in an executive role for just only a portion of tenure with the employer.

Unfortunately, some employers hold misconceptions, such as the fact that a terminated employee does not deserve a higher amount of severance package because most of their time was spent working in lower-level positions with the company, or the fact that the employee had not been performing well in their role leading up to the termination. This reflects fundamental misunderstandings about wrongful dismissal law in Ontario, even among HR managers and business owners seeking guidance from a top executive employment lawyer.

Poor Performance Does Not Always Equate to Cause for Dismissal

Ontario common law does not support a concept of “near cause” for termination. To be lawful, a termination of employment  either qualifies as “for cause” (extremely serious misconduct or performance issues), or it it does not (in which case the employee must be given prior reasonable notice of termination, or an appropriate severance package). When employers get this wrong, and face a wrongful dismissal case, they may be hit by the courts with more than full severance pay – including additional financial compensation such as general damages for breach of the duty of good faith and fair dealing, or punitive damages. 

Therefore, once an employer admits the dismissal is “without cause,” the former employee is typically entitled to receive full common law wrongful dismissal damages. From that point, reviewing or countering their severance entitlement requires expertise from an experienced severance package review lawyer or wrongful lawyer to negotiate a severance package.

When deciding the amount of wrongful dismissal damages an employee is entitled to, courts typically consider only a few key factors.

The Bardal Factors: The Core Consideration for Calculating Severance Pay

Leading decisions (most notably Bardal v. Globe & Mail) established that calculating an employee’s entitlement to a severance package for a wrongful dismissal where there is no underlying employment contract with a termination clause limiting an employee’s termination entitlements, will generally depend on a few essential factors. In particular, through a severance package review, executive employment lawyers to consider the terminated employee’s:

1. Character of the employment (e.g., executive, specialized, managerial);

2. Length of service;

3. Age of the employee;

4. Availability of comparable employment, considering training, qualifications, geography and market conditions

Character of Employment

Senior roles carry fewer comparable options in the marketplace, meaning longer recoverable notice periods, which can sometimes translate into many months of severance. In wrongful dismissal cases, the courts assess whether the role was unique or specialized, not simply by job title.

Length of Service

Courts evaluate total tenure, not just time in the latest position. Long service contributes to longer severance, even if the executive role was brief

Age

Older employees (especially over 45 or 50) are presumed to face greater difficulty re-entering similar roles, this typically translates into longer notice entitlements.

Market Conditions & Re‑employability

If sector-specific or regional job opportunities are limited, courts may extend notice periods to reflect the realism of a prolonged job search.

Exceptional Cases: When Severance Exceeds 24 Months

A 24-month severance cap is often assumed, but Ontario courts have awarded longer notice in truly exceptional circumstances:

• Milwid v. IBM Canada Ltd. (2023): 27-month award granted to a 62-year-old retiring after 38 years with specialized skills

• Currie v. Nylene Canada Inc. (2022): A 26-month severance package based on decades of service, advanced age, and limited transferability of skills, constituting effectively forced retirement.

Only those with outstanding service, advanced age, narrowly specialized expertise, or rare market conditions typically secure severance above two years.

Recruitment Inducement: How It Inflates Severance

If an employee, such as a senior executive who spent a brief period of time with a company before termination, was recruited away from stable employment (enticed by the employer) the courts may treat prior tenure as part of the tenure with the new employer, extending severance entitlements. This principle was upheld in Wallace v. United Grain Growers and its later refinements by Honda Canada v. Keays.

Hence, even after a short stint in the executive role, a history of inducement can increase severance, as courts perceive greater harm and entitlement.

Bad-Faith Termination: The Lingering Impact of Wallace & Keays

In some cases where employers act unfairly or in bad faith to employees, including leading up to termination of employment, the courts may award additional compensatory damages (financial compensation), in addition to an employee’s severance package entitlements. This is generally to compensate an employee for emotional harm or anxiety caused by the employer’s actions.

Components of an Executive Severance Package

For executives (especially C-suite executives, like CEO or CFO), courts have treated severance as inclusive of all benefits and compensation they’d have earned across the notice period.. These packages can include:

• Base salary continuation

• Bonuses and incentive payouts (even “discretionary”)

• Stock options, restricted shares (RSUs), and LTIPs

• Pension/RRSP contributions

• Benefits (extended health, disability insurance)

• Car allowance, professional dues, training, retraining support

• Outplacement services, legal and accounting fees

Courts ensure severance covers these losses, which is why hiring an employment contract review lawyer or executive employment lawyer early is critical especially when negotiating termination clauses in contracts.

When to Consult an Executive Employment Lawyer

• You should have your termination offer vetted by a Toronto employment lawyer or severance package review lawyer before signing any release.

• A lawyer to negotiate a severance package will assess whether your wrongful dismissal entitlements exceed what is offered.

• If there is a potential breach in job changes or conditions, a lawyer to review an employment contract or constructive dismissal lawyer can determine rights if constructive dismissal applies.

Final Thoughts: Why It’s Both Art and Science

Reviewing a severance package with an experienced employment lawyer is not a simple or mechanical exercise. It involves experience, understanding and applying legal precedence and detailed facts about the individual’s career, market conditions, inducement, and termination style. That is why having a constructive dismissal lawyer or employment contract review lawyer review your case early can make the difference between receiving fair separation benefits – or nothing close.

For anyone facing termination or reviewing an executive severance offer in Toronto or across Ontario, speak with a qualified Toronto employment lawyer to ensure you understand your rights. The implications of misreading your severance entitlement can be profound, and a specialized wrongful dismissal lawyer or severance package review lawyer will ensure you’re properly advised every step of the way.

Call Toronto Employment Lawyer Now

It is important for an employee (or an employee) to obtain a legal consultation before taking any action that could affect the situation at workplace. Sezar has experience advocating for both employers and employees, which allows him to anticipate the other side’s arguments and develop an effective strategy, including termination of employment.

If you are looking for a wrongful dismissal lawyer in Toronto, call us today at 647-822-5492 for a case evaluation with an experienced employment lawyer.

Disclaimer: The content on this website and blog is not legal advice or legal opinion of any kind, and is only to provide general information. It is in no way particular to your individual case and should not be relied upon in any way. The outcome of a legal matter depends on its unique circumstances, and prior successes are not indicative of future results. No portion or use of this website or blog will establish a lawyer-client relationship with the author, this law firm or any related party. Should you require legal advice for your particular situation, please fill out the form below, or call 647-822-5492, to request an initial consultation.