A full and final release is a legal agreement that can prevent you from making further claims against your employer after your employment ends.
Employers often ask employees to sign a release in exchange for an enhanced severance package. Once signed, the document can affect your ability to pursue additional severance, wrongful dismissal damages, bonuses, commissions, human rights claims and other compensation.
Don’t sign a release until you know what you’re giving up and whether the severance package is fair.
⚠️ Given a deadline to sign?
An employer can set a deadline for accepting its severance offer. Missing that deadline doesn’t erase your underlying legal rights or replace the legal deadline for pursuing a claim. Before you sign, always check first.
On This Page:
- 1. What Is a Full and Final Release?
- 2. Do You Have to Sign?
- 3. What Rights Do You Give Up?
- 4. Release Example
- 5. Signing Deadlines
- 6. Can You Negotiate?
- 7. Can a Signed Release Be Challenged?
- 8. Before You Sign
- 9. Common Questions
What Is a Full and Final Release?
A full and final release is an agreement where an employee gives up specified legal claims against an employer, often in exchange for additional severance or another settlement payment.
A release is commonly included with a termination package. The employer may offer you:
- a severance payment
- continued benefits
- bonus or commission payments
- a lump-sum settlement
- a reference or other agreed terms
- a combination of compensation and benefits
In return, the employer asks you to release claims connected to your employment and termination.
💡 A release and a termination letter are not the same document.
The termination letter tells you that your employment is ending and may outline what the employer is offering. The release sets out the rights and claims you are being asked to give up in exchange for part of that offer.
Do You Have to Sign a Release to Get Severance?
You don’t have to sign a full and final release simply because your employer asks you to.
Your employer may make an enhanced severance offer conditional on signing a release. If you don’t accept the offer, the employer can withdraw the additional amount it offered in exchange for the release.
That doesn’t mean the employer can make you sign away minimum amounts that the law requires it to provide.
You’re also likely entitled to substantially more severance than the employer has offered — as much as 24 months’ pay.
⚠️ Don’t assume the severance package is fair because your employer calls it “generous” or “enhanced.”
Your legal compensation can be much greater than the minimum amounts listed in employment standards legislation. Have the package reviewed before signing the release.
Learn more about severance pay in Canada and use our Severance Pay Calculator to estimate what you could be owed.
What Rights Can You Give Up by Signing a Release?
The wording of the release determines what claims you agree not to pursue.
A broad employment release can cover claims involving:
- additional severance or wrongful dismissal damages
- bonuses and commissions
- benefits and pension issues
- unpaid compensation
- human rights issues
- claims connected to the termination of your employment
- other disputes arising from your employment relationship
Some releases also include confidentiality, non-disparagement, return-of-property, cooperation or other continuing obligations.
Can a release affect a human rights claim?
Yes. A properly drafted release can include human rights claims. If discrimination, disability, pregnancy, age or another protected characteristic played a role in your employment or termination, get advice before signing.
Read our guide to workplace discrimination.
Can a release affect bonuses or commissions?
Yes. A release can prevent you from pursuing additional compensation after you sign it. Make sure the severance calculation properly addresses bonuses, commissions and other compensation before agreeing to settle.
Full and Final Release Example: What Does the Wording Mean?
Release documents vary, but many use wording that says the employee releases the employer from claims arising from the employment relationship or its termination.
Here is what common release language can mean in practical terms:
| Release wording | What it can mean |
|---|---|
| “Full and final settlement” | The parties intend the agreement to resolve the dispute rather than leave the employee free to seek more compensation later. |
| “Release all claims arising from employment or termination” | This is broad language aimed at preventing additional employment-related claims after settlement. |
| “Known or unknown claims” | The release may attempt to cover claims you know about as well as claims you haven’t identified yet. |
| Confidentiality clause | You may be restricted from discussing the settlement or its terms with other people, subject to the wording and lawful exceptions. |
| Non-disparagement clause | You may agree not to make certain negative statements about the employer after the settlement. |
💡 Don’t rely on the title of the document.
A document called a “Release,” “Settlement Agreement,” “Separation Agreement” or “Full and Final Release” can have the same practical effect. Read the actual terms.
Is the Deadline to Sign a Severance Release Legally Binding?
An employer’s deadline to accept a severance offer is different from the legal deadline for pursuing your severance rights.
Your employer can give you a date by which it wants you to accept an enhanced offer. If you don’t accept by that date, the employer may withdraw or change the offer.
But the employer’s deadline doesn’t erase a valid wrongful dismissal or severance claim.
The legal limitation period for pursuing a claim is set by law and is separate from a deadline written into the severance package.
⚠️ A short deadline is a reason to get advice promptly, not a reason to rush into signing.
Have the offer reviewed by our team before the deadline. Don’t assume that refusing to sign within a few days means you lose all entitlement to severance.
Can You Negotiate a Full and Final Release?
Yes. A severance package and release can be negotiated before you sign.
Negotiations can address more than the total dollar amount. Depending on the situation, employees may seek changes involving:
- additional severance
- bonus or commission payments
- benefit continuation
- the payment structure
- reference language
- confidentiality or non-disparagement terms
- restrictive covenants
- other wording in the release
You don’t have to negotiate every clause. The priority is identifying what you’re legally owed, what the employer is offering in exchange for the release and whether the settlement protects your interests.
Does negotiating mean you have to sue your employer?
No. Most severance disputes are resolved without a trial. A lawyer can review the offer and communicate with the employer to pursue an appropriate resolution.
Learn more about how to negotiate a severance package.
Can You Challenge a Full and Final Release After Signing It?
A signed release can rarely be undone. Courts expect people who sign settlement agreements to be bound by them.
Issues that can affect enforceability include:
- duress or improper pressure
- unconscionable terms
- misrepresentation
- lack of consideration
- the circumstances in which the agreement was signed
- whether the release attempts to waive rights that can’t legally be waived
Whether a signed release can be challenged depends on the agreement and the circumstances.
What Should You Check Before Signing a Full and Final Release?
1. Find out how much severance you’re actually owed
Don’t compare the offer only to employment standards minimums. Your full severance entitlement can depend on your age, length of service, position, compensation, employment contract and other factors.
2. Identify what you’re receiving for signing
Separate amounts your employer already owes you from the additional compensation being offered in exchange for the release.
3. Read what claims you’re releasing
Look for wording dealing with wrongful dismissal, bonuses, commissions, human rights, benefits and other employment-related claims.
4. Review your continuing obligations
Check confidentiality, non-disparagement, cooperation, return-of-property and restrictive clauses. Your obligations may continue long after the settlement money is paid.
5. Don’t let the employer’s deadline replace legal advice
Get the package reviewed while the offer is still open. A short acceptance window doesn’t mean you should sign without understanding the consequences.
💡 The question isn’t just “How much are they offering?”
Ask what you’re legally entitled to, what extra compensation you’re receiving for the release and exactly what rights you’re giving up.
Full and Final Release: FAQs
What does “full and final release” mean?
It means the parties intend to settle specified claims completely. In an employment termination, the employee often agrees not to pursue further claims against the employer in exchange for a settlement or enhanced severance package.
Do you have to sign a release when you’re fired?
No. You don’t have to sign simply because your employer provides one. The employer may, however, make additional settlement money conditional on signing.
Can an employer withhold all severance until you sign?
An employer can’t use a release to avoid minimum termination-related amounts the law requires it to provide. Additional compensation above those minimum obligations can be offered in exchange for signing a release.
What happens if you refuse to sign a release?
You don’t give up your underlying legal claim simply because you reject the proposed settlement. The employer can withdraw the enhanced offer, and you can decide whether to pursue the compensation you believe you’re owed.
Can you change a release before signing it?
Yes. You can propose changes to compensation or other terms. The employer doesn’t have to accept your proposed changes, but a release is part of a settlement and can be negotiated.
Can you sue after signing a full and final release?
A valid release can prevent claims covered by the agreement. Challenging a signed release is possible in very limited circumstances, but it is far better to have the agreement reviewed before signing.
Does a release affect Employment Insurance?
Severance and settlement payments can affect EI depending on how the payments are characterized and the EI rules that apply. Report your termination compensation accurately to Service Canada.
Does a release stop you from getting a reference?
No. Reference terms can be included in a settlement. If a reference matters to you, address it before signing rather than assuming the employer will provide one later.
What if you’re unionized?
Your termination and settlement rights are governed by the collective agreement and labour-relations process. Contact your union about any release or settlement. Samfiru Tumarkin LLP’s employment law team does not assist with unionized workplace disputes.
Asked to Sign a Full and Final Release?
Signing a release can permanently affect your ability to seek more severance or pursue other employment-related claims.
Don’t sign because the employer says the offer expires soon. Find out what you’re owed, what you’re receiving in exchange for the release and what rights you’re giving up.
The employment lawyers at Samfiru Tumarkin LLP help non-unionized employees across Ontario, Alberta and British Columbia review termination packages, negotiate severance and understand release agreements.
Before you sign, always check first.
➡️ Have Your Severance Package Reviewed or call 1-855-821-5900.