Severance pay for C-suite employees and executives

Severance pay for C-suite employees and executives

Severance pay for C-suite employees and executives


Severance pay is a big deal. For employees who are let go without cause. The amount of severance pay can mean the difference between being comfortable between jobs and feeling the pressure to find something immediately.


For c-suite employees (CEO, CFO etc.) severance works similarly to what the process would be for a regular employee, but there are some considerations that companies will need to make. Because c-suite employees often retain income from more than just their salary, severance packages must be prepared carefully. If not done correctly, there is a potential that the terminated employee will be able to engage in litigation for the correct amount.


This article will detail the considerations that must be made when terminating a c-suite level employee or executive.


How is Severance Pay Calculated?


Severance pay must be given if an employee is terminated without cause and not given notice. Generally, it is calculated based on the employee’s age, length of employment, and salary. For more information about how severance is calculated and given, refer to our guide for Ontario severance pay and the Employment Standards Act (ESA)


For c-suite employees and executives, severance may have more components than a regular employee. Packages should account for all types of income and compensation, including any stocks, incentives, RRSP and pension contributions, profit-sharing, accounting fees, employee discounts, membership dues, car services, and anything else that might have contributed to their earnings.


If you are a company looking to terminate the employment of a c-suite employee or executive, it is important to examine every avenue that the employee in question’s earned income. Otherwise, you could be leaving yourself open to the possibility of the employee taking legal action.


If you are a c-suite employee or executive facing termination, make sure to keep track of your income levels and sources to better advocate for the severance that you are owed.


But, considering how large numbers could begin to get when considering all avenues of income for C-Suite employees, it is also important to know what limitations there are on severance packages.


What are the Limits on Severance Packages for C-Suite Employees and Executives?


Most importantly, severance packages can be limited for c-suite employees based on an employment agreement or an offer of employment. If either offer includes a termination clause, it may restrict the entitlements of the C-Suite employee. Then that employee could stand to receive a great deal less for their severance package than they would be otherwise.


C-suite employees and executives are also subject to the same rules on termination as any other employee. If they are terminated with cause, or given written notice, then they will not receive a severance package.


Employers and employees should keep a keen eye out for what is included in their contracts. If they want to ensure that they get their desired outcome. Employees should be sure to make note of what could potentially get them terminated with cause. And what rights they have as employees to receive severance.


The best way to make sure that you are protecting yourself is to obtain counsel and work through your options with a qualified lawyer.


Why is it a Good Idea to Seek Counsel?


There is a lot that needs to be considered when drafting a severance package, especially with c-suite employees and executives. It is a good idea to have a lawyer help you through the process to ensure that you are not opening yourself up to potential legal action from the employee. so, Having a lawyer write out a clause in clear language will help you avoid trouble. 


For employees signing employment agreements, one clause could potentially change the way that their life plays out after a termination. It is always a good idea to seek legal counsel and get a second opinion on your employment agreement before signing it. As an employee who has been terminated. It is a good idea to seek legal counsel to ensure that you have been treated fairly.


For whichever situation you are in, seeking help from a qualified team of lawyers is always a good idea. It will save you from money loss, worry, and potential liability down the line. 




Terminating an employee is always a big deal. But terminating a c-suite employee or executive requires an extra level of care and attention. All forms of income must be considered when drafting a severance package. Employers can protect themselves from enormous payouts through carefully drafted termination clauses included in employment agreements. 


If you are an employer drafting an employment agreement. Or if you have questions about how to terminate a c-suite employee or executive. Be sure to reach out to a qualified workplace lawyer at Achkar Law.


If you are an employee at the c-suite level facing termination or considering an employment agreement. You can always reach out for assistance from the team at Achkar Law. 


Contact Us


If you are an employer or employee with questions about terminating a c-suite employee or executive. Our team of experienced workplace lawyers at Achkar Law can help. So, Contact us by phone toll-free at 1-800-771-7882 or email us at [email protected], and we will be happy to assist. 


If you are a small or medium-sized company looking for full-service support with a same-day response, visit our CLO Program page for our strategic solutions.