A Lawyer to Review Your Severance Package

Losing your job can be financially and emotionally difficult, especially when your employer presents a severance package and asks you to sign it within a few days. The amount offered may appear reasonable, but accepting it without understanding your legal rights could mean giving up compensation or other benefits to which you may be entitled.

In Quebec, a severance package is not necessarily limited to the minimum amounts required under employment standards. Depending on your position, length of service, age, employment contract, and the circumstances surrounding your dismissal, you may have rights to additional compensation.

Having a lawyer review your severance package can help determine whether the offer is fair, identify potentially problematic provisions, and assess whether negotiating better terms would be appropriate.

What Should You Do Before Signing a Severance Package?

If your employer has offered you a severance package, consider the following steps before accepting it:

1. Request a complete written copy of the offer, including any release or settlement agreement.
2. Review your employment contract, compensation arrangements, bonuses, benefits, and other relevant documents.
3. Verify whether the proposed compensation reflects your minimum legal entitlements and any additional rights you may have.
4. Examine provisions concerning confidentiality, non-competition, non-solicitation, and the release of legal claims.
5. Consider the potential consequences for employment insurance, pension benefits, and other compensation.
6. Avoid signing a final release before understanding what rights you would be giving up.
7. Pay attention to any deadline for accepting the offer and any applicable deadline for pursuing a legal remedy.

An employer may impose a short deadline for accepting a particular settlement offer. However, that deadline does not necessarily eliminate your underlying legal rights. Those rights may be subject to separate limitation periods or procedural deadlines.

The most important consideration is that signing a severance agreement may permanently settle claims that could otherwise have been pursued.

What Is a Severance Package Under Quebec Law?

A severance package generally refers to the compensation and benefits offered to an employee when their employment ends.

It may include several components:

• Payment in lieu of notice of termination.
• Additional compensation intended to settle potential legal claims.
• Outstanding salary, vacation pay, or earned bonuses.
• Continued insurance coverage or other employment benefits.
• Pension-related arrangements.
• Outplacement services or professional transition assistance.
• Compensation for the termination of certain contractual benefits.

Not every severance package contains all these elements. Some employers offer only the minimum amounts they believe are legally required, while others propose more generous terms in exchange for a comprehensive release.

The expression “severance package” is commonly used in employment negotiations, but Quebec law distinguishes between different types of compensation arising from the termination of employment.

Understanding these distinctions is essential when evaluating an offer.

How Much Severance Pay Are You Entitled to in Quebec?

There is no universal formula that determines the appropriate severance payment for every employee in Quebec.

The amount depends on the applicable legal framework and the circumstances of the employment relationship.

Minimum Notice or Compensation Under Employment Standards

Quebec employment standards generally establish minimum notice requirements when an employer terminates an employee’s employment.

For employees covered by these rules, the minimum notice generally increases with uninterrupted service:

These minimums are subject to exceptions, including certain circumstances involving serious misconduct or other situations recognized by law.

An employer may generally provide the required working notice or compensation in lieu of notice.

However, meeting the minimum employment standards does not necessarily satisfy every obligation arising from the termination of employment.

Reasonable Notice Under Quebec Civil Law

For many employees with contracts of employment for an indeterminate term, Quebec civil law provides an additional framework for determining whether the notice of termination was reasonable.

The appropriate notice depends on several factors, including:

• The employee’s age.
• Length of service.
• Nature and seniority of the position.
• Level of responsibility.
• Circumstances surrounding the employment relationship.
• Difficulty of obtaining comparable employment, where relevant.

Unlike minimum employment standards, reasonable notice is not calculated using a fixed statutory table.

For example, an employee who has worked for the same employer for 18 years in a specialized management position may be entitled to substantially more compensation than the minimum eight weeks prescribed by employment standards.

However, the precise amount cannot be determined solely from years of service or job title.

The employment contract, circumstances of termination, and applicable legal principles must also be considered.

Does Quebec Law Guarantee One Month of Severance for Every Year Worked?

No.

The idea that an employee automatically receives one month of severance pay for every year of service is a common misconception.

Although years of service are important, Quebec law does not establish such a universal formula.

In some circumstances, a reasonable notice period may be significantly longer than the minimum employment standards. In others, the employee’s contractual arrangements or the facts surrounding termination may lead to a different result.

A lawyer reviewing a severance package should therefore assess the individual circumstances rather than relying on a simplified calculation.

Why Should a Lawyer Review Your Severance Package?

A severance agreement is often more than an offer of money.

It may also be a legal settlement designed to end the employment relationship and prevent future disputes.

A lawyer can examine both the financial value of the offer and the legal consequences of accepting it.

Determining Whether the Compensation Is Adequate

The first question is whether the proposed amount reasonably reflects the employee’s potential entitlements.

This involves examining salary, length of service, benefits, contractual arrangements, and the circumstances of dismissal.

For employees receiving commissions, performance bonuses, or other variable compensation, determining the appropriate value of a severance package may require a detailed review of compensation policies and past payments.

An offer based exclusively on base salary may fail to account for other elements of remuneration that are legally relevant.

Reviewing the Release of Claims

Many severance agreements contain a release through which the employee agrees not to pursue further claims against the employer.

Depending on its wording and enforceability, such a release may affect claims relating to:

• Additional termination compensation.
• Unpaid bonuses or commissions.
• Certain employment benefits.
• Alleged wrongful conduct during termination.
• Other disputes arising from the employment relationship.

Some statutory rights and remedies are subject to restrictions on waiver, and a release does not necessarily eliminate every possible claim.

Nevertheless, signing a broadly worded settlement may substantially limit the employee’s ability to seek additional compensation.

The scope of the release should therefore be carefully examined.

Identifying Restrictive Clauses

A severance agreement may contain provisions that continue to affect an employee after their departure.

These may include confidentiality obligations, restrictions on soliciting former clients or employees, and non-competition obligations.

Under Quebec law, post-employment non-competition restrictions are subject to important legal requirements. Their enforceability depends on their wording, scope, and the circumstances of termination.

An employer cannot necessarily enforce every restriction simply because it appears in a signed document.

However, employees should not assume that restrictive provisions are automatically invalid.

A lawyer can assess whether the proposed obligations are reasonable, enforceable, or appropriate for negotiation.

Can You Negotiate a Severance Package in Quebec?

Yes. In many circumstances, a severance package can be negotiated.

An employer’s initial offer is not necessarily its final position.

However, the possibility of obtaining better terms depends on the strength of the employee’s legal position, the employer’s willingness to negotiate, and the circumstances of termination.

Negotiations may concern more than the total amount of money.

Possible subjects include additional compensation, payment schedules, benefit continuation, bonuses, professional references, restrictive covenants, and the wording of the release.

Accepting the Initial Offer

Accepting an initial offer may be appropriate when the compensation is reasonable, the terms are clear, and the employee wishes to resolve the matter quickly.

The principal advantage is certainty.

The employee knows what compensation will be received and can avoid the costs and delays associated with a dispute.

The disadvantage is that acceptance may prevent the employee from later pursuing additional compensation.

Negotiating a Better Agreement

Negotiation may be appropriate when the offer appears insufficient or contains provisions that create unnecessary risks.

For example, an employee may be willing to accept the proposed financial compensation but object to an excessively broad non-solicitation provision.

Negotiating the wording of that provision may be more important than obtaining a modest increase in payment.

However, negotiations do not guarantee improvement. An employer may refuse to change the offer, and a voluntary settlement proposal may not remain available indefinitely.

Pursuing a Legal Remedy

Where negotiations fail, an employee may have access to legal proceedings or administrative remedies.

The appropriate forum depends on the nature of the claim, the employee’s status, the applicable employment legislation, and whether the employee is unionized.

Legal proceedings can sometimes produce a more favourable result, but they also involve uncertainty, time, and potential expense.

An assessment of the likely recovery should be balanced against the practical costs and risks of pursuing the dispute.

Example: A Long-Service Employee Offered Eight Weeks of Pay

Consider a hypothetical employee who has worked for a Quebec company for 16 years.

The employee is 56 years old, occupies a specialized management position, and earns an annual salary of $110,000.

Following a restructuring, the employer terminates the employee’s employment and offers eight weeks of salary in exchange for a full release.

The employer explains that eight weeks represents the minimum notice required under Quebec employment standards.

That explanation may accurately describe the applicable statutory minimum, assuming no exception applies.

However, it does not necessarily resolve the question of reasonable notice under Quebec civil law.

Given the employee’s age, length of service, specialized responsibilities, and employment circumstances, a longer notice period may be justified.

The employee may therefore have grounds to negotiate additional compensation.

The outcome would depend on the employment contract, the nature of the position, and other relevant facts.

The example illustrates why compliance with minimum employment standards does not automatically mean that a severance package is adequate.

What Happens to Bonuses, Commissions, and Benefits?

Severance negotiations frequently become complicated when compensation includes more than a fixed salary.

Bonuses and Commissions

Employees may be entitled to compensation relating to bonuses or commissions earned before termination.

Depending on the applicable agreements and legal principles, additional amounts may also be relevant when determining compensation associated with an insufficient notice period.

The wording of a bonus plan matters, but it is not necessarily decisive in every situation.

For example, a provision requiring active employment on the bonus payment date may raise questions about its enforceability or application when employment ends without adequate notice.

The analysis depends on the particular plan and circumstances.

Group Insurance and Other Benefits

An employee’s benefits may represent a significant portion of total compensation.

When reviewing a severance package, it is important to determine whether insurance coverage continues, when it ends, and whether any replacement compensation is being offered.

Employees should also verify the practical availability of coverage, since continuation may depend on the insurance contract and the employer’s arrangements with the insurer.

Pension Plans and Retirement Benefits

Termination may affect pension contributions, retirement arrangements, and other long-term benefits.

The consequences vary depending on the type of plan and its governing rules.

A severance agreement should not be evaluated solely by comparing the proposed payment with the employee’s regular salary.

Can Severance Pay Affect Employment Insurance?

Yes.

Payments received following termination may affect the administration of employment insurance benefits.

The treatment of severance payments depends on the nature of the amounts, the applicable federal rules, and any temporary measures in effect.

A payment described as damages, severance, or settlement compensation is not necessarily treated according to its label alone.

Employees should therefore avoid assuming that changing the wording of a settlement agreement will automatically prevent employment insurance consequences.

The payment structure may also have tax implications.

For example, salary continuance and lump-sum payments can have different administrative and financial consequences.

Because employment insurance and income taxation are governed by federal rules, these questions should be considered separately from the employee’s entitlement to compensation under Quebec employment law.

What if You Were Dismissed Without Cause?

An employer in Quebec may generally terminate an indeterminate employment contract without alleging misconduct, provided the termination complies with applicable legal obligations.

These may include adequate notice or compensation, as well as other protections that apply to the employee.

However, termination without cause does not necessarily mean that the employee is entitled to unlimited compensation.

The analysis depends on the applicable legal framework.

Certain employees may also have access to a specific remedy for dismissal without good and sufficient cause.

Eligibility depends on statutory conditions, including the employee’s length of service and the availability of other appropriate remedies.

Such proceedings may involve remedies beyond ordinary termination compensation, potentially including reinstatement.

This is one reason why reviewing a severance package should involve more than calculating a notice period.

What if Your Employer Claims You Were Fired for Cause?

An employer may argue that an employee’s misconduct justifies termination without notice or compensation in lieu of notice.

However, not every performance problem, workplace disagreement, or disciplinary incident amounts to a sufficiently serious reason to terminate employment without notice.

The circumstances must be examined carefully.

Relevant considerations may include the seriousness of the alleged conduct, the employee’s responsibilities, prior warnings, and whether the employment relationship could reasonably continue.

An employee who receives a severance offer following allegations of misconduct should also consider whether accepting the agreement could affect their ability to dispute those allegations.

The legal assessment may be particularly important where the termination involves reputational concerns or allegations of dishonesty.

Can You Challenge a Severance Agreement After Signing It?

Sometimes, but doing so can be difficult.

A signed severance agreement may constitute a binding settlement.

An employee who later discovers that the proposed compensation was less generous than expected cannot necessarily reopen the agreement simply because they regret accepting it.

A challenge may be possible in certain circumstances, including where consent was affected by legally significant misrepresentation, threats, or other recognized defects.

However, ordinary negotiation pressure or dissatisfaction with the amount received does not automatically invalidate an agreement.

The employee’s ability to challenge a settlement also depends on the wording of the agreement and the legal rights involved.

This is why reviewing the agreement before signing is generally more effective than attempting to undo it afterward.

What if You Are Asked to Sign Within 24 or 48 Hours?

Some employers present severance packages with very short acceptance deadlines.

This can create significant pressure, particularly when an employee has just learned that their employment is ending.

A short deadline does not automatically make the agreement invalid.

However, employees may request additional time to review the documents and obtain advice.

An employer is not necessarily required to extend a voluntary settlement offer, but the deadline imposed for accepting that offer does not automatically extinguish the employee’s statutory or civil rights.

It is also important to distinguish between the deadline to accept a severance proposal and the deadline to file a legal complaint.

Certain employment-related remedies are subject to relatively short filing periods.

Allowing those periods to expire while negotiating may jeopardize available remedies.

Special Considerations for Unionized Employees and Federally Regulated Workplaces

Not every employee in Quebec is governed by the same employment framework.

Unionized Employees

For unionized employees, termination rights and procedures are generally governed by the collective agreement and the applicable labour relations framework.

Disputes may need to be pursued through a grievance and arbitration process rather than an ordinary civil claim.

The union’s role and the applicable deadlines can be decisive.

A severance offer made to a unionized employee should therefore be assessed in light of the collective agreement and the employee’s representation rights.

Federally Regulated Employees

Certain workplaces operating in Quebec are subject to federal employment legislation rather than Quebec’s ordinary employment standards regime.

Examples may include banks, airlines, and certain telecommunications or interprovincial transportation businesses.

Different notice requirements, severance obligations, and dismissal remedies may apply.

It would therefore be incorrect to assume that every employee working physically in Quebec is entitled to the same minimum compensation.

Employees With Fixed-Term Contracts

A fixed-term employment contract raises different issues.

Where an employer ends the contract before its agreed expiry date, the employee’s rights may depend on whether early termination was legally justified and what the contract provides.

The analysis is not necessarily the same as for an employee whose contract has no predetermined end date.

How Much Does It Cost to Have a Lawyer Review a Severance Package?

The cost of a legal review depends on the complexity of the agreement and the work required.

A straightforward review of a short severance offer may require relatively limited time.

A more complex matter may involve examining an employment contract, bonus arrangements, pension benefits, restrictive covenants, and the circumstances surrounding dismissal.

The cost may also increase if the lawyer is asked to negotiate directly with the employer or pursue legal proceedings.

Some lawyers offer fixed-fee reviews, while others charge hourly rates.

Before retaining a lawyer, an employee can clarify whether the mandate covers only a review and legal opinion or also includes negotiations.

It is also useful to determine what documents must be provided and whether the lawyer will deliver written recommendations.

The objective is to ensure that the potential value of the review is proportionate to the cost and the legal issues involved.

What Documents Should You Provide for a Severance Review?

A meaningful review generally requires more than the termination letter.

Relevant documents may include the employment contract and amendments, severance offer, release agreement, recent pay statements, bonus and commission plans, benefit summaries, and communications relating to termination.

Performance evaluations, promotion letters, and documents establishing changes in responsibilities may also be relevant.

Where misconduct is alleged, disciplinary records and related correspondence may be particularly important.

The more accurately the employee’s compensation and employment history can be established, the more reliable the assessment is likely to be.

The Most Important Points Before Accepting a Severance Offer

A severance package should be evaluated as both a financial proposal and a legal agreement.

The minimum notice required under Quebec employment standards may represent only part of an employee’s potential entitlement.

Reasonable notice, contractual compensation, bonuses, benefits, and other available remedies may materially affect the value of the claim.

At the same time, a higher severance payment is not always the only objective. The wording of a release, restrictions on future employment, payment arrangements, and the costs of a dispute may be equally important.

Having a lawyer review a severance package can help clarify these issues before the employee makes a binding decision.

The essential question is not simply whether the employer’s offer appears generous, but whether it reasonably reflects the employee’s legal rights, financial interests, and circumstances.

This text is provided for legal information purposes only. If you have a specific question regarding your personal situation, please contact a lawyer.

Allen Madelin Avocats offer consultations both in person and via videoconference. The first consultation is offered for $125.For more information, please contact us by telephone: 1 514 904 4017 or by e-mail: [email protected].