A severance review should ensure that an employee is receiving fair and legally compliant compensation upon termination. Here’s what it should include:
1. Termination Clause Review (if There’s An Employment Contract)
• Is there a written contract?
• Does it have a termination clause limiting severance?
• Is that clause legally enforceable (e.g., not violating minimum standards under provincial employment laws)?
2. Compliance With Employment Standards
• Check minimum statutory entitlements under the relevant provincial or federal employment standards legislation (e.g. the Employment Standards Code in Alberta).
• This includes:
• Notice period or pay in lieu of notice
• Vacation pay and other accrued entitlements
3. Common Law Entitlements
• Employees without enforceable termination clauses may be entitled to reasonable notice under common law, which is often much more generous than statutory minimums.
• Factors include:
• Age
• Length of service
• Position/title
• Availability of similar employment
4. Benefit Continuation
• Are health, dental, and other benefits being continued during the notice period?
• Is the coverage equivalent to what was provided during employment?
5. Bonus And Commission
• Are unpaid bonuses, commissions, or profit-sharing amounts being paid out?
• Does the severance package account for lost bonuses during the notice period?
6. Non-compete / Non-solicit Clauses
• Are there any restrictive covenants?
• Are they enforceable?
• Are they reasonable in terms of time, geography, and scope?
7. Release And Waiver
• Most severance packages include a release the employee must sign to receive payment beyond the statutory minimum.
• Review the language to ensure it’s not overly broad or unfair.
8. Other Considerations
• Outplacement support or career counseling
• Reference letters or employment confirmations
• Treatment of stock options, pension, RRSP matching, etc.
*Always seek legal advice. The above is for information purposes only.
Stephen Dugandzic received his Juris Doctor degree from the University of Alberta in 2013 and is Calgary-based. He previously practised with Bennett Jones LLP and Taylor Janis LLP before founding YYC Employment Law Group in 2018 and Evolution Legal in 2026.