Severance Agreement Template

SEVERANCE AGREEMENT AND RELEASE

Termination Of Employment — Province Of Ontario, Canada

THIS SEVERANCE AGREEMENT AND RELEASE (the "Agreement") is made on 2026-05-31 between Northwind Logistics Inc. (the "Employer") and Sarah Margaret Chen (the "Employee"). The Employee was hired by the Employer on 2017-03-15 and most recently held the position of Senior Operations Manager in the Operations department, at an annual gross salary of 125,000.00 CAD. The Employee's employment with the Employer ends on 2026-06-30 (last day worked: 2026-06-30), representing approximately 9.3 year(s) of service. The Parties wish to settle, on a full and final basis, all matters arising out of the Employee's employment and the ending of that employment, with the intention that this Agreement be a final and binding settlement of those matters, governed by the Employment Standards Act, 2000, S.O. 2000, c. 41 and the common law of the Province of Ontario.

In full and complete satisfaction of all of the Employer's obligations to the Employee on termination of employment — whether under the Employment Standards Act, 2000, S.O. 2000, c. 41, the common law of reasonable notice, or otherwise — the Employer shall pay to the Employee a lump-sum severance payment in the gross amount of 54,375.00 CAD, less all required statutory deductions (income tax, CPP and EI as applicable). The payment shall be made within fourteen (14) days after this Agreement has been signed by both Parties and the statutory revocation period (if any) has expired, by electronic funds transfer to the Employee's bank account on file.

Payment-schedule notes:
The Employee may, by written notice to the Employer's payroll function within 14 days after signing, elect to receive up to the eligible-rollover portion as a direct transfer to a nominated RRSP under ITA paragraph 60(j.1) (no source deductions on the eligible portion).

In consideration of the severance payment described in Article 1 above, and other good and valuable consideration the receipt and sufficiency of which is acknowledged, the Employee hereby releases, remises and forever discharges the Employer, its parent companies, subsidiaries, affiliates, officers, directors, shareholders, agents, employees, successors and assigns (collectively, the "Releasees") from any and all actions, causes of action, claims, demands, damages, costs and expenses of any kind whatsoever, whether at common law, in equity or under any statute, that the Employee has had, now has or may in the future have against the Releasees arising out of or in any way connected to the Employee's employment with the Employer or the termination of that employment. Without limiting the generality of the foregoing, this release expressly extends to: (a) all claims for wrongful dismissal, constructive dismissal, breach of contract and breach of any implied or express duty of good faith; (b) all claims for unpaid wages, vacation pay, public-holiday pay, bonuses, commissions and benefits; (c) all claims under the Employment Standards Act, 2000, S.O. 2000, c. 41, the federal Canada Labour Code (where applicable), the applicable provincial Human Rights Code (subject to any carve-outs noted below), the federal Canadian Human Rights Act (where applicable), the Workplace Safety and Insurance Act, 1997 (or provincial equivalent), and any other applicable employment-related statute, regulation or by-law; and (d) all claims for general, aggravated, punitive, moral or exemplary damages, including Honda v Keays moral damages, Wallace bumps, and all damages for mental distress or injury to feelings. The Employee acknowledges that the consideration described in Article 1 above exceeds any minimum statutory entitlement and represents fair, full and final compensation for the ending of the employment relationship.

Carve-outs (claims expressly NOT released):
Claims that cannot be waived as a matter of law, including: any vested entitlement under the Employer's registered pension plan; any unpaid vested but unexercised stock options or RSUs; any claim under the Workplace Safety and Insurance Act, 1997 for a compensable workplace injury or occupational disease; and any claim arising after the date of this Agreement.

Confidentiality of this Agreement and of Employer information. The Employee shall keep the existence, terms and amount of this Agreement strictly confidential, save that the Employee may disclose them to the Employee's immediate family, lawyer, accountant or financial advisor on a need-to-know basis (each of whom must be bound to the same obligation of confidentiality), and as required by law. The Employee also confirms the continuing effect of all pre-existing confidentiality, trade-secret, intellectual-property and proprietary-information obligations owed to the Employer, whether arising under the Employee's employment agreement, a separate confidentiality agreement, the common law of confidential information, or the law of equity.

Mutual non-disparagement. The Employee shall not make any statement (whether oral, written, electronic, social-media or otherwise) that disparages or could reasonably be expected to disparage the Releasees, their products or services, or the Employee's former colleagues. The Employer shall, by separate written direction, instruct its current officers and directors not to make any equivalent disparaging statement about the Employee. Nothing in this clause prevents either Party from: (i) making truthful statements in any judicial or regulatory proceeding under compulsion of law; (ii) providing factual information to a regulator; or (iii) making truthful statements in a confidential reference enquiry processed through the Employer's Human Resources function.

Return of Employer property. Within 14 day(s) after the termination date stated above, the Employee shall return to the Employer all property of the Employer in the Employee's possession or control, including without limitation: laptop, mobile devices, security badges, keys, credit cards, documents, files, customer lists, source code, work product, manuals, samples, and any copies (electronic or paper) of any of the foregoing. The Employee shall also permanently delete from any personal device any Employer-confidential information, and shall confirm such deletion in writing to the Employer's Human Resources contact on request.

Section 54 of the Employment Standards Act, 2000 requires the employer to give written notice of termination (or pay in lieu under section 61) on the following scale (section 57): 1 week for less than 1 year of service; 2 weeks (1+ year); 3 weeks (3+ years); 4 weeks (4+ years); 5 weeks (5+ years); 6 weeks (6+ years); 7 weeks (7+ years); and 8 weeks (8 or more years of service). Where the employee has 5 or more years of service AND the employer has an Ontario payroll of $2.5 million or more (or has terminated 50 or more employees in a 6-month period as part of a business closure), section 64 of the Act ALSO requires the employer to pay separate severance pay of 1 week per year of service, calculated to the nearest tenth of a year, up to a statutory cap of 26 weeks (section 65). The Parties confirm that the severance amount stated in Article 1 above has been calculated with reference to (and is intended to discharge in full) the Employee's statutory entitlement under the Employment Standards Act, 2000, S.O. 2000, c. 41. The Parties further record that the Employer's Ontario payroll size is approximately CAD 18.5 million, which is relevant to the section 64 severance-pay threshold.

The severance amount stated in Article 1 above has also been considered in light of the Employee's entitlement at common law to reasonable notice of termination, having regard to the four factors recognised by Chief Justice McRuer in Bardal v Globe and Mail Ltd., [1960] O.W.N. 253 (Ont. H.C.) and applied consistently in Canadian wrongful-dismissal jurisprudence to the present day:

Character of employment: senior management or executive role
Length of service: 9.3 year(s)
Age at termination: 47
Availability of similar employment: moderate (broad role with comparable openings, normal market conditions)

The Parties confirm that the severance amount is intended to represent (and to discharge in full) the Employee's reasonable-notice entitlement at common law, in addition to all statutory entitlements under the Employment Standards Act, 2000, S.O. 2000, c. 41.

The Parties acknowledge the principles articulated by the Ontario Court of Appeal in Waksdale v Swegon North America Inc., 2020 ONCA 391 (leave denied [2021] S.C.C.A. No. 213), as reaffirmed and extended in Dufault v Ignace (Township), 2024 ONCA 915 — namely, that if any termination provision in the Employee's prior employment agreement breaches the Employment Standards Act, 2000, S.O. 2000, c. 41, the termination provisions in their entirety are void and the Employee is entitled to reasonable notice at common law, irrespective of any severability clause. The severance amount stated in Article 1 has been calculated on the assumption that the Employee's reasonable-notice entitlement (statutory and common-law) is fully discharged by the consideration described in this Agreement, and this Agreement is intended to operate as an independent settlement of that entitlement (and not as enforcement of any termination clause potentially affected by Waksdale or Dufault).

The Employee expressly acknowledges, having received independent legal advice on the terms and effect of this Agreement, that the Employee is a sophisticated party for the purposes of Rahman v Cannon Design Architecture Inc., 2022 ONCA 451. The Employee further acknowledges that the bargaining circumstances surrounding this Agreement were truly arms-length, that no oppression, duress, undue influence or unconscionable bargaining power imbalance was present, and that the consideration set out in Article 1 represents a fair settlement reflecting the Employee's realistic statutory and common-law entitlements. This acknowledgment is intended to reinforce the enforceability of this Agreement against any future argument that the Employee was not in a position to make an informed bargain.

The Parties acknowledge that the severance amount described in Article 1 above is a "retiring allowance" within the meaning of subsection 248(1) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (the "ITA"). It will accordingly be included in the Employee's income under subparagraph 56(1)(a)(ii) of the ITA, and reported by the Employer on the Employee's T4A for the calendar year of payment.

Retiring-allowance treatment + eligible-rollover calculation. Under paragraph 60(j.1) of the ITA, the Employee may transfer the "eligible portion" of the retiring allowance directly to the Employee's own RRSP (or RPP) without using available RRSP contribution room. The eligible portion is calculated as: (i) $2,000 multiplied by the number of years (or part-years) of service before 1996 during which the Employee was employed by the Employer or a related person; plus (ii) $1,500 multiplied by the number of years (or part-years) of service before 1989 during which no employer pension contributions vested in the Employee.

Service-year breakdown:
Pre-1996 years of service: 0 × $2,000 = $0
Pre-1989 years of service with no vested employer pension: 0 × $1,500 = $0

Eligible portion (rollover-eligible amount): 0.00 CAD.

The Employer will arrange for the eligible portion to be transferred directly to an RRSP nominated by the Employee, on receipt of a completed Form T2151 (or equivalent direct-transfer form) signed by the Employee. The eligible-portion transfer is exempt from withholding tax under subsection 153(1) of the ITA and Regulation 100(3). Any non-eligible balance will be paid to the Employee net of source deductions at the applicable lump-sum withholding rate (10% / 20% / 30% depending on gross amount).

T4A reporting. The Employer will report the eligible portion of the retiring allowance in Box 66 of the Employee's T4A, and the non-eligible portion in Box 67. The Employee remains solely responsible for including the full amount in the Employee's income in the year of receipt and for any consequent tax liability.

Additional T4A notes:
The Employee's entire period of service post-dates 1996; no pre-1996 or pre-1989 service-year credit is available under ITA paragraph 60(j.1). The full retiring allowance will be reported in T4A Box 67 (non-eligible) and is subject to the applicable lump-sum withholding rate.

Reference. The Employer agrees to provide a positive and specific reference letter (job title, dates, duties, accomplishments, and a personalised recommendation) on request from a prospective employer.

Agreed reference wording:
The Employer will, on request from a prospective employer, confirm that Sarah Chen was Senior Operations Manager at Northwind Logistics Inc. from March 2017 to June 2026, leading the East Region fulfilment operations team. Ms. Chen consistently met or exceeded operational targets, restructured the Toronto fulfilment workflow in 2024 (reducing same-day shipping defect rate by 18%), and was a respected mentor to junior operations staff. We recommend her without reservation for a comparable senior operations role.

Outplacement services. The Employer will pay for outplacement services for the Employee (provider: Lee Hecht Harrison (Toronto office)), up to a maximum value of 5,000.00 CAD. The Employee may elect a different qualified outplacement provider, in which case the Employer will reimburse on receipt of paid invoices, up to the same maximum value.

Continuation of group benefits. The Employer will continue, at its cost, the Employee's coverage under all group benefits (extended health, dental, vision, EAP, group life and ADandD, short- and long-term disability) for a period of 26 week(s) from the termination date stated above. Coverage will end on the earlier of: (a) the expiry of the continuation period; (b) the Employee becoming eligible for comparable coverage with a new employer; or (c) the Employee's rejection of any required premium-sharing contribution.

Non-Solicitation. For a period of 12 month(s) following the termination date stated above, the Employee shall not, directly or indirectly: (a) solicit any then-current customer or client of the Employer with which the Employee had material dealings during the 12 months immediately preceding termination, for the purpose of supplying competitive products or services; or (b) solicit any then-current employee of the Employer to leave the employment of the Employer, or hire any such employee within 6 months after that employee leaves the Employer's employment.

The Employee warrants to the Employer that the Employee has been given the opportunity to obtain independent legal advice on the terms and effect of this Agreement before signing it, that the Employee has read this Agreement in its entirety and understands its terms, and that the Employee is signing it freely, voluntarily and without duress, undue influence, mistake or misrepresentation. The Employee acknowledges that the Employer has not given (and is not authorised to give) any legal or tax advice to the Employee with respect to this Agreement, and that the Employee has had a reasonable opportunity to consider this Agreement and to obtain such advice.

This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein, including (where applicable) the federal Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), and is subject to the Employment Standards Act, 2000, S.O. 2000, c. 41. The Parties attorn to the exclusive jurisdiction of the courts of the Province of Ontario with respect to all disputes arising out of or in connection with this Agreement.

This Agreement constitutes the entire agreement between the Parties with respect to the termination of the Employee's employment and supersedes all prior negotiations, representations and agreements between them on that subject. No amendment to this Agreement is effective unless made in writing and signed by both Parties. This Agreement may be signed in counterparts, including by electronic signature, each of which is deemed an original and all of which together constitute one and the same agreement. The Employee's signature is witnessed by Hannah Reilly of 142 Cottingham Street, Toronto, ON M4V 1B9, who is not a Party to this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated.