The Severance Counter-Offer Letter

Why the First Offer Is Usually the Floor

Most termination letters are drafted around the Employment Standards Act (ESA) minimums — the least the employer can legally pay. Sometimes the offer lands a week or two above the floor so it feels generous. What it almost never reflects is your common-law entitlement, which is usually far larger.

A counter-offer letter is simply where you put that second number in writing, with the reasoning attached. Employers expect it. Responding in writing is not aggressive — it’s the normal, professional move, and it’s what turns an opening bid into a real negotiation.

What a Counter-Offer Letter Must Contain

1. 1

   “Without prejudice” at the top

   These negotiations are meant to settle a dispute. Marking the letter “without prejudice” keeps it from being used as an admission later if talks break down.

2. 2

   Your facts, briefly

   Start date, role, age, salary, and total compensation (benefits, bonus, pension, commissions). One short paragraph. This is the foundation for every number that follows.

3. 3

   The statutory floor, done correctly

   Show you know your ESA minimums — termination pay and, if you’re eligible, severance pay. Occasionally the first offer is actually below the legal minimum, and pointing that out changes the conversation immediately.

4. 4

   Your common-law position

   State the notice period you say is reasonable under the Bardal factors, and translate it into total compensation — not just salary. You don’t need to cite cases in most letters, but one landmark citation (your calculator or letter will include them) signals you’ve done the homework.

5. 5

   A specific settlement figure

   One clear number, tied to the calculation above. Vague letters (“I feel this is unfair”) get filed; specific ones get answered.

6. 6

   Your own response deadline

   Employers put tight deadlines in offer letters to create pressure; those deadlines are theirs, not the law’s. Ask for the time you need, and give them a reasonable date — 10 to 14 days is typical — to respond to your counter.

Ask for More Than Weeks

The weeks-of-pay number gets all the attention, but a severance package has many parts — and the non-cash parts often cost the employer little while meaning a lot to you. A good counter-offer letter addresses each of these:

• Benefits continuation

  Health, dental, and insurance coverage for the full notice period — or a cash equivalent. Losing coverage the day you’re terminated is the default only if you don’t ask.

• Bonus and commission treatment

  Bonuses earned for completed periods, and a pro-rated share for the year you were cut short. Under Matthews v. Ocean Nutrition, bonus plan wording matters — check what the plan actually says before conceding anything.

• Pension and RRSP contributions

  Employer contributions during the notice period are part of total compensation. They’re easy to overlook and add up.

• A reference letter, agreed in advance

  Ask for the letter’s wording to be settled as part of the deal, plus agreement on what will be said to anyone who calls. A strong reference is worth real money in your next job search.

• A narrower release

  The release is what you sign to get paid. Check its scope: it should cover the employment relationship, not every conceivable claim forever. If it sweeps in unrelated matters, ask to narrow it. Never sign it before the deal is final — signing the release ends the negotiation.

• Non-compete and non-solicit clauses

  If your contract or the release contains restrictions on your next job, ask for them to be removed or narrowed. Employers will often trade paper restrictions they’d struggle to enforce.

• Payment timing and structure

  When you’ll be paid, and how — lump sum versus salary continuance affects income tax timing and EI. Ask for the structure that suits you rather than accepting the default.

Sample Counter-Offer Letter (Fictional)

The letter below is a fictional example in the style our engine produces. The person, company, and figures are invented — your letter would be built from your facts.

How to Read This Letter

• It opens below the floor, on purpose

  The strongest possible first move is arithmetic: the offer is less than the statutory minimum. No rhetoric needed — the ESA does the arguing. (The letter assumes the employer qualifies for ESA severance pay — Ontario payroll of $2.5 million or more, or 50+ employees severed within six months. Against a smaller employer the floor is termination pay alone, and the letter leads with the common-law range instead.)

• The range comes before the ask

  Notice is framed as a range (12–15 months) grounded in Bardal, then the specific ask (13 months) lands inside it. The number reads as measured, not plucked from the air.

• Everything is priced as total compensation

  Salary, benefits, pension, and bonus are all in. Offers quoted as “weeks of salary” quietly exclude the rest — this letter doesn’t.

• The non-cash asks ride along

  Reference letter, benefits continuation, and a narrower release are requested in the same document, while there’s still leverage to ask.

• The release stays unsigned

  The letter says so explicitly. Signing the enclosed release to “get the process started” would have ended the negotiation before it began.

Mistakes That Weaken a Counter-Offer

• Signing the release first “to think it over.” Once signed, your leverage is gone — the deal is done, at their number.
• Sending an angry letter. Frustration is understandable; in writing, it only hardens the other side and lives in the file forever. Firm and factual beats heated every time.
• Countering with a round number and no breakdown. “I want $100,000” invites dismissal. The same figure, built from labelled calculations, invites a response.
• Panic-accepting because of the deadline in their letter. Signing deadlines are pressure tactics. The limitation period for a wrongful dismissal claim in Ontario is generally two years — you have more time than the letter wants you to believe (but don’t sit on it indefinitely either).
• Forgetting the non-salary pieces. Benefits, bonus, pension, and the release wording are negotiated now or never.
• Bluffing with threats you won’t carry out. A calm statement that you’ll pursue your entitlements lands better than an ultimatum you don’t mean.

Related guides

• Sample severance demand letter
• How to negotiate severance without a lawyer
• Severance pay calculator (Ontario)

General information only — not legal advice. If you believe the termination was discriminatory or reprisal for exercising ESA rights, speak to an employment lawyer promptly.