Why You Should Never Sign a Severance Package Without Legal Advice?
When employees are let go without cause, it is common for the employer to offer a severance package. So, Why You Should Never Sign a Severance Package Without Legal Advice? Often, this package is presented with a deadline and framed as “generous” or “standard.” However, a recent decision from the British Columbia Supreme Court—Hoem v. Macquarie Energy Canada Ltd., 2025 BCSC 446—shows just how important it is to have that severance reviewed by an employment lawyer before signing. The consequences of not doing so could mean walking away from hundreds of thousands of dollars in rightful compensation.
Although this case was decided in British Columbia, the legal issues it raises—particularly regarding unenforceable termination clauses and common law notice entitlements—are relevant in Ontario.
The Case: Hoem v. Macquarie
Mr. Hoem was a high-earning salesperson with Macquarie Energy Canada Ltd., working there for 17 years. He earned a base salary of $100,000 per year, but most of his compensation came through commissions—often well into the six-figure range.
When Macquarie terminated Mr. Hoem without cause, they offered him a modest severance package, relying on the termination clause in his employment contract. Fortunately, Mr. Hoem did not accept the offer without question. Instead, he challenged it in court—and won.
Among other things, the court found that the termination clause in his contract was unenforceable, meaning Mr. Hoem was entitled to common law reasonable notice, rather than the minimal package his employer had offered. Ultimately, he was awarded 19 months of compensation, including salary and commissions. Including damages for bad treatment at the time of dismissal, he was awarded nearly $1 million.
What Ontario Employees Can Learn
In Ontario, the Employment Standards Act, 2000 (ESA) sets out minimum standards for notice and severance pay. However, employees are often entitled to significantly more under the common law—especially if they are terminated without cause and do not have an enforceable termination clause in their contract.
Ontario courts, like their counterparts in British Columbia, closely scrutinize termination clauses. If the language of the clause does not comply strictly with the ESA—for example, by allowing for dismissal without notice for cause or denying benefits during the notice period—it may be declared void. When that happens, the employee becomes entitled to reasonable notice at common law, which can be as much as 24 months or more, depending on factors such as age, length of service, and role.
That is exactly what happened in Hoem v. Macquarie—and the result was a difference of over a million dollars.
Why Legal Review Is Essential
The average employee is not expected to know whether a termination clause is enforceable or whether a severance offer reflects full legal entitlements. That is why getting advice from an employment lawyer is so important. A lawyer can:
- Identify invalid or unenforceable termination language;
- Calculate potential common law entitlements, including bonuses, commissions, and benefits;
- Assess whether the severance package accounts for all compensation types;
- Help negotiate a better deal or pursue legal action, if necessary.
Employers may offer a package that only includes the ESA minimums, hoping the employee does not seek legal advice. But signing that agreement may mean waiving your right to significantly more compensation.
In Mr. Hoem’s case, had he accepted what Macquarie initially offered, he could have forfeited nearly $1 million in compensation. Instead, by getting legal advice and asserting his rights, he received the full value of what he was entitled to.
The Takeaway
If you are terminated in Ontario, do not rush to sign anything. Even if the offer seems fair, there may be legal issues with your contract or the amount being offered. Employment contracts are often drafted to favour the employer, and unless carefully reviewed, employees may miss out on substantial entitlements.
Mr. Hoem’s case is a reminder that the law protects employees—and that the difference between signing quickly and seeking legal advice can be life-changing.
If you have concerns about your severance package or a workplace issue, you should speak with an experienced employment lawyer. To better understand your employment rights, we encourage employees and employers to seek legal advice. We at Whitten & Lublin are happy to provide insight and advice into your specific circumstances. If you are looking for employment lawyers and would like more information about what Whitten & Lublin can do for you, please contact us online or by phone at (416) 640-2667 today.
Author – Rachel Patten