Considering a Buyout Offer? Five Things to Think About Before You Sign

Voluntary departure packages and workforce buyouts have become an increasingly common feature of the Canadian employment landscape, particularly as employers in technology, telecommunications, media, and financial services adjust to changing economic conditions. If you have recently received an offer — or expect you might — the decision deserves careful thought.

Below are five issues worth considering before you respond.

1. Understand what the package represents.

A voluntary departure offer is a structured proposal. It typically reflects a formula the employer has applied across a group of eligible employees, often tied to years of service. That formula may align with what you are entitled to under the Employment Standards Act, 2000 and at common law, or it may not.

In Ontario, departing employees are generally entitled to reasonable notice of termination, calculated using the Bardal factors: age, length of service, the character of the position, and the availability of similar employment. For long-tenured employees, senior managers, and older workers in particular, reasonable notice can be substantial, and a careful comparison between the offer and the legal entitlement is worthwhile.

2. Pay attention to what the release covers.

Buyout offers are typically conditional on signing a release. Releases vary, but they commonly extinguish claims related to:

• Severance and pay in lieu of notice

• Unpaid bonus, commission, or equity-based compensation

• Continuation of benefits and pension contributions

• Human rights claims

• Constructive dismissal claims

Understanding the scope of the release and whether it is appropriately tailored to the circumstances is an important part of evaluating any offer.

3. Know the timeline.

Voluntary programs usually come with a deadline for response. The window is often shorter than employees expect, and it is worth confirming early how much time you have to consider the offer and, where appropriate, to seek advice. If you need additional time, it is generally reasonable to ask for it.

4. Consider what happens if you decline.

Choosing not to accept a voluntary offer is not the same as being terminated, and declining is not, on its own, grounds for dismissal. That said, the months following a buyout program can bring organizational changes, and any material reduction to your role, compensation, or responsibilities should be carefully evaluated for its practical implications and legal significance.

5. Consider getting independent legal advice

Employment law is fact-specific, and the distinction between a fair offer and one that warrants further discussion can turn on details that are not obvious on a first reading. A short consultation with an employment lawyer can help you understand:

• How the offer compares to your legal entitlements

• Whether anything in the release is broader than necessary

• What, if anything, may be reasonable to discuss further with the employer

• How tax and timing considerations may affect the value of the package

Some voluntary programs include a legal review allowance; where one is available, it is worth using.

If you have received a buyout offer and would like to discuss it, please feel free to contact our Employment & Labour Law team.

This article provides general information only and does not constitute legal advice. The application of employment law to any particular situation depends on facts not addressed here. For advice on your specific circumstances, please consult an employment lawyer.