Signing a severance agreement without careful review can cost you tens of thousands in owed compensation, as many employees accept offers far below their legal entitlements. When signing severance agreement what to check becomes your focus, start by comparing the package against minimum statutory requirements and your common law rights. In Canada and the US, employers often draft these agreements to minimize payouts while securing broad releases of liability. Use our free severance calculator to benchmark your offer instantly.

Key Takeaways

• Ontario courts have awarded up to 24 months of reasonable notice for senior employees with long service.
• US employees over 40 get 21 days minimum to review severance agreements under the Older Workers Benefit Protection Act.
• British Columbia's Employment Standards Act mandates at least 2 weeks' notice or pay in lieu after 3 months of service, but common law often doubles or triples this.
• Federal WARN Act requires 60 days' notice or pay for mass layoffs affecting 50+ employees in the US.

Understand Minimum Statutory Entitlements vs Common Law Rights

Employees in Ontario must receive at least the minimums under the Employment Standards Act, 2000 (ESA), SO 2000, c 41, which provides 1 week of termination pay per year of service up to 8 weeks maximum. This statutory floor applies to most non-unionized employees, but signing a severance agreement waives only these minimum rights unless it explicitly preserves higher common law entitlements. Courts enforce the ESA as a baseline, voiding any agreement term that provides less.

Common law notice periods far exceed ESA minimums for non-senior roles. In Bardal v Globe & Mail Ltd OWN 253 (Ont HC), the court established factors like age, length of service, and role character to determine "reasonable notice," often 1 month per year of service. For US employees, the Fair Labor Standards Act (29 USC § 201 et seq.) mandates payment of accrued wages but no severance, leaving packages to negotiation or state laws like California's under Labor Code § 201 for final pay within 72 hours.

Real numbers highlight the gap. A 5-year employee earning $80,000 annually qualifies for 5 weeks ESA minimum ($7,692), but common law might award 6-8 months ($40,000-$53,333). Always check if the agreement references your employment contract, which may guarantee more, as prior documents can influence enforceability.

The Release of Claims Clause Employees Overlook

The release clause in severance agreements waives your right to sue for wrongful dismissal, discrimination, or unpaid wages, often covering unknown future claims. This "heart of the agreement" for employers binds you broadly unless carved out specifically, such as preserving vested pension rights or statutory overtime under the ESA. Overlooking its scope means forfeiting valuable claims, especially in human rights violations.

In Power v. Brunet 2023 ONSC 1243, an Ontario court upheld a release but invalidated overly broad non-compete terms, awarding the employee additional 12 months' notice ($150,000) beyond the signed 6 months. The case underscores how courts scrutinize releases for unconscionability, particularly if signed under duress without legal advice. US cases like Oubre v. Entergy Operations, Inc. 522 US 422