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A Severance Agreement is a legal contract that sets out the terms when an employer and employee part ways. It typically offers the departing employee compensation and benefits beyond their final paycheck, in exchange for specific commitments like keeping company information confidential and not pursuing legal claims.

Under Canadian employment law, these agreements often include more than just the minimum severance required by provincial standards. They commonly address notice periods, extended health benefits, outplacement services, and reference letters. The agreement becomes legally binding once both parties sign it, giving each side clarity and protection during the separation process.

Consider using a Severance Agreement when ending an employment relationship needs to be handled carefully and professionally. This is especially important during restructuring, when dealing with senior executives, or in situations where protecting company interests is crucial.

Canadian employers often use these agreements to reduce legal risks during layoffs, department closures, or when offering early retirement packages. They're particularly valuable when the departing employee has access to confidential information, strong client relationships, or when the termination circumstances might lead to disputes. Having clear terms about ongoing obligations, reference letters, and non-competition helps both sides move forward confidently.

• Severance Contract: Basic agreement outlining standard termination terms and compensation package
• Severance Settlement Agreement: More comprehensive version used to resolve potential disputes or complex separations
• Outplacement Services Severance Agreement: Includes career transition support services alongside severance terms
• Layoff Separation Agreement: Specifically designed for group terminations or restructuring situations
• Outplacement Services Agreement: Focuses exclusively on career transition support details and delivery terms

• Employers/Companies: Initiate and draft Severance Agreements, typically through HR or legal departments, to manage employment terminations and protect business interests
• Departing Employees: Review and sign agreements, receiving compensation and benefits in exchange for specific commitments
• Employment Lawyers: Draft, review, and negotiate terms to ensure compliance with Canadian employment laws and protect their clients' interests
• HR Professionals: Coordinate the agreement process, explain terms to employees, and ensure proper documentation
• Outplacement Consultants: Help implement career transition services when included in severance packages

• Employee Details: Gather complete employment history, current salary, benefits, and position details
• Termination Specifics: Document the reason, effective date, and any prior disciplinary actions or performance reviews
• Package Components: Calculate severance pay, vacation pay, benefits continuation, and any additional perks
• Legal Requirements: Check provincial employment standards for minimum notice and severance obligations
• Company Interests: List confidential information, client relationships, and intellectual property to protect
• Document Generation: Use our platform to create a legally sound agreement that includes all required elements and protections

• Identification Section: Full legal names and addresses of both employer and employee
• Consideration Details: Clear breakdown of severance pay, benefits, and any additional compensation
• Release Clause: Employee's agreement to release the employer from legal claims
• Confidentiality Terms: Ongoing obligations regarding company information and trade secrets
• Non-Competition/Solicitation: Reasonable restrictions on future employment activities
• Return of Property: Requirements for returning company assets and materials
• Reference Policy: Terms for future employment references and communications
• Governing Law: Specification of applicable provincial jurisdiction
• Signature Block: Space for dated signatures with witness provisions

A Severance Agreement differs significantly from a Collective Bargaining Agreement in several key ways. While both deal with employment terms, their scope, timing, and purposes are quite different.

• Individual vs. Group Focus: Severance Agreements handle individual employment terminations, while Collective Bargaining Agreements set broad terms for entire groups of unionized workers
• Timing of Creation: Severance Agreements are created at employment end, while Collective Bargaining Agreements are negotiated before or during employment
• Negotiating Parties: Severance Agreements involve one employer and one employee, while Collective Bargaining Agreements are negotiated between unions and management
• Legal Framework: Severance Agreements follow employment standards legislation, while Collective Bargaining Agreements must comply with additional labor relations laws
• Duration and Scope: Severance Agreements handle one-time termination matters, while Collective Bargaining Agreements govern ongoing employment relationships