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Should I sign the severance package offered by the employer?

Do Not Sign Off on a Severance Package or Sign a Release Without Legal Advice!

What is a Severance package or Termination package or Employment Release documents?

A severance package spells out the payment and the benefits that the employer is willing to offer to an employee who is being laid off. It may include some of the following:

  • Notice period of termination (also known as working notice) or payment in lieu of a required notice period;
  • Any additional payment for unused vacation time, holiday time or sick time;
  • Retirement benefits;
  • Stock options; 
  • Non-compete clause; and
  • Transitional arrangements, such as assistance with finding replacement job, etc.

Keep in mind that this severance package is only an offer from the employer. Take the time and the opportunity to have your severance package thoroughly reviewed by our experienced employment lawyers.

Can a lawyer help me negotiate a better severance package?

In our experience, all severance packages are negotiable. Most often, the initial severance offer is far less than what you may be legally entitled to. You do not have to accept what your employer offers nor should you sign any documents before consulting an experienced employment lawyer. 

Most importantly, you may be entitled to common law severance (see article on Statutory Severance v. Common Law Severance) which is usually much higher than the minimum severance obligation set out in the Employment Standards Code of Alberta and Canada Labour Code and is often offered by the employer. 

There is no formula to calculate common law severance package. The primary factors used to examine to calculate common law severance package include:

  • Employee’s age at termination;
  • Employee’s length of service;
  • Employee’s character of employment;
  • Employee’s salary and other benefits, including bonuses; and
  • Availability of similar employment.

As no two cases are similar and your unique circumstances may entitle you to higher common law severance package. In most cases, only a lawyer can negotiate or sue to achieve maximum common law severance package. 

What if the severance package has a deadline?

If your employer has given you a deadline for signing the severance offer, do not feel pressured to respond to your employer’s timeline. The employer cannot require or coerce you to sign the severance package and must give you a reasonable time to consider their severance offer, including giving you adequate time to contact a lawyer to review the documents.

Also note the limitation period for bringing a civil claim against the employer is typically two years from the date of dismissal.

What is a release and should I sign it?

A release is an acknowledgement to not sue the employer for any claims arising out of the employment relationship and upon the termination of the employment relationship. 

A release is a contract, whereby you are giving up a valuable right to sue your employer; hence, the employer must provide you adequate compensation for the same. 

Many employers put a condition that if you want severance pay, then must sign the release. Your lawyer might be able to negotiate an enhanced severance package for waiving off your right to file a claim against the employer.

What is a non-compete clause?

Sometimes, employers attempt to extract a non-compete covenant from the employee, which may limit your ability to finding a similar employment post termination of employment or starting a new business and it is crucial that you carefully evaluate this clause. 

What should I do after I have been terminated?

Document! Document! Document!

Document everything! After you have been terminated, you may no longer be able to access the work email and work computer. However, if possible consider making a copy of the following:

  • Any employment agreement or contracts signed over the years;
  • Any employment handbook that spells out your benefits, rights, etc;
  • Your latest paystubs;
  • Performance reviews; and 
  • Record any conversations you may have had with human resources, or your manager.

Most importantly leave the workplace without any confrontation and return all company property, such as building pass, cellphone, laptop etc if reasonably possible. Most importantly, immediately contact our experienced employment lawyer to book an initial consultation.

Can I collect from EI (unemployment insurance) after I sign the severance package?

If you have already agreed to a severance package, then you must tell Service Canada the details with respect to the severance package. You might not be able to collect EI after signing the severance package. Thus, it is important to take into consideration your loss of EI benefits, when signing a severance package.

SPECIAL NOTE:

Termination is usually an unpleasant experience. Being terminated attacks your identity, self-esteem and self-worth. Most importantly, it jeopardizes your ability to support yourself and your family.

This is not the time to “do it your-self”, since you do not know employment law, you do not know your rights, you do not have experience dealing with lawyers and you are likely overwhelmed with emotions. Please immediately contact our experienced Employment lawyers, to find out your rights if your employment has been terminated. 

At Shim Law, we cater exclusively to the needs of wrongfully dismissed or laid off employees. We can help you obtain the best possible severance available based on fair and just compensation. Our experienced Employment lawyers are:

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About Shim Law

Shim Law is a multicultural law firm that provides legal services to clients in Calgary and around the world. With lawyers fluent in up to 20 languages, we can provide accurate legal representation regardless of language barriers. Our practice areas include family law, real estate law, and more.

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