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The Question

I was recently dismissed or terminated by my employer and was asked to sign a release. Am I required to sign one and, if I so, what kind of consideration should I ask for in return?

The First Answer

Bill Howatt

Howatt HR Consulting, Kentville, N.S.

The simple answer is no. The main purpose for a signed release is to create a clean break between employee and employer. The signed release is a legal agreement that protects both parties from the risk of future legal action.

Do you understand why you were released, and the employer's rationale for doing so? Do you believe that you were treated fairly? When employees believe strongly that they have been treated unfairly, they may want to fight for what they believe are their rights. That often is expensive, time consuming and emotionally draining, with no guarantee of obtaining the desired outcome.

Employees terminated for cause can be defined as having engaged in misconduct, such as theft. Employees can be terminated without cause where the decision is driven by an operational decision, such as budget restraints.

Regardless of the reason for termination, if you choose to sign a release, your employer cannot withhold anything that is stipulated in the employment contract or in the employment statute. For example, the employer must give you your record of employment.

It is common practice, regardless of the reason for termination, for employers to offer employees some type of incentive to sign a release, such as a transition period for medical benefits, outplacement counselling and a lump sum payment, often defined by a formula that is dependent on the number of years of service. These incentives are not legal obligations; they are to motivate the employee to sign their release and move on.

What incentive is your employer offering you to sign? Most incentives are pretty standard, without much wiggle room. In the end, keep in mind that most employers are motivated to provide some incentive to influence employees to sign a release to mitigate any future claim.

The Second Answer

Doug Nathanson

Chief human resources officer, Canadian Tire

This must be a stressful time for you and I commend you for thinking through all of the implications associated with the end of your employment with this company.

It is common for an employer to ask a dismissed employee to sign a release related to all potential outstanding claims that he or she might have. Speaking in general terms, an employee is not required to sign such a release. However, if the employee chooses not to sign, that can affect the separation package that the employer is prepared to provide.

All provinces have legislation outlining the minimum standards for notice, and in some cases severance, that employers must provide to employees who have been dismissed without cause. Examples include the Ontario Employment Standards Act and the Alberta Employment Standards Code.

Employees are entitled to these minimum notice periods (or a payment in lieu), regardless of whether they sign a release. Recognizing that common law notice (or commensurate pay) often exceeds an employee's statutory entitlement, employers frequently offer more than the provincial legislation requires and, in return, require a signed release from the employee.

The employee then has to make a decision whether to sign the release and accept the separation package (which, in addition to notice and/or compensation might include outplacement services, extension of benefits or retention of company-issued property) or contest its adequacy based on common law factors such as age, position and length of service.

Before accepting any separation offer and signing a release, you should take the time you need to ensure you fully understand what the package contains and what rights you may be waiving. This is not a decision to rush into and, if you need to, be sure to engage external legal counsel for specific advice.

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