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By Jason Heath, CFP on October 15, 2025
Estimated reading time: 6 minutes

By Jason Heath, CFP on October 15, 2025
Estimated reading time: 6 minutes

If you receive a severance package, you’ll have choices to make around your finances. Here’s how to make the best of a bad situation.

At 7.1%, Canada’s unemployment rate is the highest it has been in four years and people in a variety of sectors have been feeling the pinch. A job loss is difficult for a lot of reasons. On top of the personal feeling of rejection, there can be many decisions to make involving legal, tax, insurance, investment, and cash-flow matters. Here is a rundown.

In every province and territory, there are statutory minimum payments that you are entitled to receive as an employee whose employment is terminated. This is called termination pay. This generally applies after three months of continuous employment and is meant to provide a safety net after you are let go without cause. Termination pay is generally a certain number of weeks of salary per year of service up to a maximum.

Beyond this minimum payment, employers may also offer severance pay. This compensation is beyond the statutory minimum and based on common-law entitlements—basically, what you might get if you went to court. Both employees and employers prefer non-litigious solutions to a termination, and so may agree on a payment that is somewhere in between the statutory minimum termination pay and the common-law severance amount.

Severance pay is not a specific formula, because the potential entitlement can be based on things like someone’s length of service, the type of position they hold, their age, and other factors.

When an employer offers a severance package, the employee is not obligated to take it. They can seek advice from an employment lawyer to understand the offer and whether they should be asking for any........

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