Don’t Use Severance as Leverage: Courts are Not Impressed

The Ontario Superior Court recently reminded employers that employment agreements aren’t optional – they’re enforceable. In Timmins v. Artisan Cells, 2025 CanLII 2387, the employer ignored its own termination provisions and tried to use severance as leverage for a release. It backfired big time.

The Court found the employer repudiated the employment contract and awarded the employee nine months’ common law notice, for a total of $456,908 in damages.

What Happened?

The employee started working for an American gene therapy company, Artisan Development Labs (ADL), in 2019. By 2021, he was Executive VP and leading the launch of a Canadian subsidiary, Artisan Cell Labs (ACL), in Toronto. He had a generous compensation package, including a $475,782 salary, stock options, and a bonus.

His 2019 agreement said that if he was let go without cause, he’d get the greater of three months’ pay or his Employment Standards Act, 2000 (ESA) minimums. When he was let go in 2023, he was legally entitled to three weeks’ ESA notice. But instead, the company offered one week, plus some additional severance, but only if he signed a full and final release.

To complicate things, the employee had been negotiating a licence deal with ADL and ACL for gene-editing tech in exchange for a stake in a new venture. After he was terminated, the company pulled back on those negotiations and offered an inferior licence – again, only if he signed the release.

The Court’s Take

The Court found that the employers’ failure to pay severance under the agreement, unless the employee signed a release, amounted to repudiation. In other words, their conduct showed they no longer intended to be bound by the contract.

The judge drew on Perretta v. Rand A Technology Corporation, where similar tactics also led to a finding of repudiation. Like in that case, the court here said the employer had no right to withhold contractual severance to get a broader release (which included non-disclosure and non-disparagement terms).

The court awarded nine months of common law notice based on the employee’s age (44), senior role, 3.5 years of service, and the niche nature of his work in gene therapy.

No Punitive Damages

The employee also asked for punitive damages, but the court said the common law notice award – triple the contractual amount – was deterrent enough.

Takeaway for Employers

You can’t hold severance hostage to get a release. If your contract entitles an employee to severance, you need to pay it – full stop. Trying to squeeze a release in exchange for what’s already owed can cost you far more in the end.

Last Word

If you’re letting someone go and there’s a contract in place, follow it. Don’t try to shortchange an employee or use severance as leverage. If you’re unsure, run it by us first. We’ll help you stick the landing and avoid a $450K mistake.

Share the Post:

Related Posts

Team member practicing mindfulness and reflection during a workplace learning session about AI adoption and growth mindset culture.

AI in the Workplace Starts With Mindset 

AI success depends on more than software and policies. Organizations that build curiosity, transparency, and continuous learning are better positioned to adapt to change. Here’s how leaders can create a growth mindset culture that helps teams embrace AI with confidence.

Read More »
Manager consulting with AI robot at computer about workplace performance decisions

When to Keep Humans in the Loop 

AI can surface useful workplace insights, but it cannot replace human judgment. Before relying on data to make people decisions, employers need clear boundaries. This blog explains where human involvement is essential and how to reduce legal risk while using AI effectively.

Read More »

Contact Us

Thank You For Your Interest. Kindly Complete The Form Below. Our Client Services team will be in touch with further information about our fees and intake process.
[grow-contact-form]