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Exit Contract for Canada

Exit Contract Template for Canada

A comprehensive legal agreement governed by Canadian federal and provincial laws that formalizes the termination of employment between an employer and employee. This document outlines the terms and conditions of the employment separation, including severance payments, benefits continuation, confidentiality obligations, and mutual releases. It ensures compliance with Canadian employment standards while protecting both parties' interests and providing clarity on post-employment obligations. The agreement incorporates relevant provisions from both federal legislation and applicable provincial employment laws, making it adaptable to specific provincial requirements while maintaining consistency with federal regulations.

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What is a Exit Contract?

The Exit Contract serves as a crucial legal document in Canadian employment law, used when formally terminating an employment relationship. It is particularly important for ensuring both employer and employee interests are protected during the separation process. This document is essential when implementing voluntary or involuntary terminations, retirement arrangements, or mutual separation agreements. The Exit Contract typically includes provisions for severance payments, ongoing obligations, benefit continuations, and releases of claims, all while ensuring compliance with both federal and provincial employment standards. It's designed to prevent future disputes by clearly documenting all aspects of the separation agreement and must be carefully drafted to ensure enforceability under Canadian law. The document is especially critical for positions involving access to confidential information, senior management roles, or long-term employees where the termination package may be more complex.

What sections should be included in a Exit Contract?

1. Parties: Identification of the employer and employee entering into the exit agreement

2. Background: Brief context of the employment relationship and reason for termination

3. Definitions: Key terms used throughout the agreement

4. Termination Date: Specification of the official end date of employment

5. Final Payment and Benefits: Details of salary, benefits, and other compensation up to the termination date

6. Severance Package: Complete breakdown of severance pay, continuation of benefits, and other termination-related compensation

7. Release of Claims: Employee's release of legal claims against the employer

8. Confidentiality Obligations: Ongoing duties regarding confidential information

9. Return of Company Property: Requirements for returning all company assets and information

10. References: Agreement on how employment references will be handled

11. Tax Treatment: Clarification of tax implications and responsibilities

12. Governing Law: Specification of applicable jurisdiction and law

13. Entire Agreement: Integration clause confirming this document represents the complete agreement

14. Execution: Signature blocks and date of agreement

What sections are optional to include in a Exit Contract?

1. Non-Competition: Restrictions on working for competitors - used for senior employees or those with access to sensitive information

2. Non-Solicitation: Restrictions on soliciting employees or customers - typically included for client-facing or management roles

3. Equity Compensation: Treatment of stock options or other equity - required if employee has equity-based compensation

4. Outplacement Services: Provision of career transition support - often included for long-term or senior employees

5. Ongoing Cooperation: Requirements for transition assistance or future cooperation - useful for key positions or pending projects

6. Medical Benefits Extension: Details of extended health coverage - relevant for jurisdictions without public healthcare or for enhanced coverage

7. Mutual Non-Disparagement: Agreement not to make negative statements - important for senior roles or public-facing positions

8. Immigration Status: Addressing work permit implications - necessary for employees on work permits

What schedules should be included in a Exit Contract?

1. Schedule A - Severance Calculation: Detailed breakdown of severance payment calculations

2. Schedule B - Benefits Continuation Details: Specific information about continued benefits coverage and duration

3. Schedule C - Company Property Checklist: List of company assets to be returned

4. Schedule D - Outstanding Equity Details: Summary of stock options or other equity compensation

5. Schedule E - Reference Letter: Agreed form of reference letter

6. Appendix 1 - Resignation Letter: Form of resignation letter to be signed by employee

7. Appendix 2 - Release: Detailed release of claims document

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Publisher

Ƶ

Cost

Free to use
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Relevant Industries

Financial Services

Technology

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Human Resources

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Finance

Executive Leadership

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Relevant Roles

Chief Executive Officer

Chief Financial Officer

Senior Manager

Department Director

Project Manager

Sales Representative

Software Developer

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Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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