I Just Got Fired. Should I Sign a Severance Package Agreement and General Release?

You just found out you’ve been fired from your job. Most likely, you were given documents detailing the payments you’re entitled to and a general release letter to tie up loose ends. It can be shocking and overwhelming, and you may feel obligated to sign the severance agreement and general release right away.

Job loss is ranked #8 on the list of most stressful experiences. In a stressful situation like getting fired, your emotions run high and it can be difficult to think clearly or make major decisions. If your employer pressures you to sign your severance package or release quickly, you may feel rushed and regret signing those documents later.

Stop. Take a deep breath. Focus for a few minutes and let’s review your rights before you sign anything.

What Am I Entitled To When I’ve Been Fired?

In Alberta, terminated employees are protected and entitled to fair payment under the Employment Standards Code. There are minimum amounts you have a right to, but in many cases, employees are entitled to significantly more than the minimum.

If what your employer is offering you seems low, it probably is. An estimated 75% of severance packages are not what they should be. It’s worth reviewing your severance package with an employment lawyer to ensure you’re getting what you deserve.

Considerations to Determine Fair Severance & Termination Pay

We’ve detailed employee rights to severance and termination pay in What am I Entitled to During the Termination Notice Period? But we’ll summarize some of that again for you here.

Minimum Termination Pay under the Employment Standards Code

The Employment Standards Code requires a minimum amount of termination notice or pay in lieu. This amount varies depending on several factors including the length of your employment.

The Code is the first and most important factor to determine the minimum amount you’re entitled to. But it’s just that – the bare minimum. In most cases, employees are entitled to more under common law.

Extended Benefits or Pay in Lieu

If your employment agreement included benefits beyond your paycheque (such as health care benefits), you’re entitled to more than the minimum termination pay. Common law allows for an extension of those benefits or an additional payment to compensate you for them.

Alternative Employment Opportunities & Retirement Eligibility

The availability of a new job opportunity and the state of the economy (particularly as it impacts your industry) has a substantial bearing on what you’re entitled to. If you already have a new job offer, that could impact your severance agreement with your former employer.

If you’re nearing retirement, the severance package you’re entitled to may differ from that of someone who wouldn’t be retiring for a long time.

Human Rights Violations or Discrimination

If the employer committed discrimination or violations of human rights (such as gender discrimination or sexual harassment) prior to your termination, you may be entitled to a better severance package.

Maternity, Parental, Sick or Disability Leave

In some cases, you may be entitled to more severance if you were on maternity, parental, sick or disability leave at the time of your termination.

Length of Your Employment

The length of your employment with the company is a key factor in determining the severance you’re entitled to. However, there’s more to it than simply the time you’ve spent working for your employer. Other considerations need to be addressed, such as:

  • Was your employment always with this company, or was your employer bought out by or amalgamated with another company at some point during your employment?
  • Were you actively recruited by this employer from a secure position at another company?
  • Does your employment contract determine the length of your employment and its bearing on your severance package?

It’s clear that there’s more to a fair severance package than the minimum amount required by law. In Alberta, the courts decide on each case individually and take into consideration various factors to determine what you’re entitled to as a terminated employee.

Because your rights are determined on an individual basis, it’s important that you DO NOT SIGN A SEVERANCE AGREEMENT AND GENERAL RELEASE before you have it reviewed by an employment lawyer.

7 Reasons NOT to Sign a Severance Agreement & General Release Before Consulting a Lawyer

Here are 7 more reasons to hold off on signing those documents until you’ve consulted a lawyer.

1. This is a major life change.

Common advice when making important decisions is to “sleep on it” for at least a day, preferably up to 3 days before finalizing your plans.

Consider the decision to buy a house – another major life change. Most people take the time to hire a home inspector and work with the realtor to make sure it’s the right decision and that they’re getting a fair price.

Similarly, losing your job and accepting a severance package is a major life decision. Particularly if you worked for the company for a long time or if you were nearing retirement, that severance package will have a huge impact on your life both now and potentially in the future.

Think about how significant this is and take into account the stress and emotions involved. As when buying a house, enlisting the help of an expert on the matter of your employment situation makes sense.

2. Tight signing deadlines are legally irrelevant.

Some employers pressure you to sign a severance agreement by saying the offer is only valid for 24 hours (or some other time frame). An expiry date or deadline to sign a severance agreement usually holds no legal relevance to what you’re entitled to as a terminated employee.

That said, there are sometimes deadlines for filing a legal claim, so it’s not something you want to procrastinate on. All you need is a few days to seek legal counsel before signing. Request an extension on the deadline and do not sign anything until it’s been reviewed thoroughly.

3. You may have a right to more than money.

Finances are typically the biggest concern when you’re fired, but you may be entitled to more than money. Some of your additional entitlements may include:

  • Damages,
  • Extended benefits,
  • Reference letters for future employment opportunities,
  • A say in how your termination is announced,
  • Outplacement counseling,
  • Pension rights,
  • Tax treatment for your severance package, and
  • Many other things.

Often, terminated employees won’t be offered these things without asking for them directly even though they’re legitimately entitled to them.

4. Mistakes happen.

Mistakes do happen. Even careful employers can accidentally miscalculate things or forget about legal protocol for terminating employees. Innocent mistakes can cause errors that impact your entitlement. An extra set of eyes to review your severance agreement and general release can ensure there are no mistakes.

5. Contracts are usually created in the employer’s best interest.

In most cases, a severance contract is created with the intention of protecting the employer from being sued while minimizing the financial cost of terminating the employee. A general release is a contract to prevent you from taking legal action against the employer in the future.

The very least you can do to protect your own interests is to avoid signing those contracts hastily.

6. A signed severance agreement & release are final.

A signed general release makes it nearly impossible for you to take legal action against your employer with respect to your employment. If you sign it to get out of the awkward and stressful situation thinking you can look at it more closely later and fight for what you deserve, you’ll be making a grave mistake.

If you look at your contracts later and realize you were treated unfairly, there’s little you can do if those documents are signed. While it’s extremely rare, there are some circumstances in which the court will agree to set aside a signed release. Your case must meet the following conditions:

  • The terms of the termination do not meet the minimums dictated by the Employment Standards Code.
  • You were not allowed to seek legal counsel before signing.
  • You were threatened by the employer to sign the contract.
  • There is evidence that the employer clearly took advantage of their position and bargaining power such as in the case of an employee’s illiteracy, ignorance of the language, blindness, illness or other disability.

7. Few things are worse than regret.

Job loss is rarely a positive memory, but you can at least have peace of mind and know you were treated fairly if you have your case reviewed by a seasoned employment lawyer before you sign anything. Even though it doesn’t make the experience of getting fired more enjoyable, you can have assurance that you did everything you could to ensure it turned out as well as possible, under the circumstances.

Before You Sign a Severance Agreement or General Release

Your mental and emotional health and financial future are well worth the extra time it takes to obtain the advice of a legal professional before you sign a severance agreement or general release contract.

If you’ve already signed a release, a lawyer can help you determine if your situation qualifies for the courts to set the release aside.

The experienced Calgary employment lawyers of Osuji & Smith Lawyers can assess your situation and point out anything in your contracts that are unfair or inaccurate. We can help you determine what you’re entitled to. We are flexible on fee structure and offer both flat fee and contingency fee arrangements depending on your circumstances. 

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