Can You Lose WSIB Benefits by Signing a Settlement Release in Ontario?

If you’re dealing with a workplace injury and your employment has ended, often you are offered a settlement package that includes a “full and final release.” While these agreements can resolve disputes and provide compensation, many employees wonder: What happens to my WSIB benefits if I sign this release?

The good news is that your WSIB entitlements are likely protected, but there are important nuances you need to understand.

Your WSIB Rights Are Protected by Law

Under Ontario’s Workplace Safety and Insurance Act (WSIA), your right to workplace injury benefits is fundamentally protected. Section 16 of the Act is crystal clear:

“An agreement between a worker and his or her employer to waive or to forego any benefit to which the worker or his or her survivors are or may become entitled under the insurance plan is void.”

This means that even if you sign a settlement release, you generally cannot give up your right to WSIB benefits for a workplace injury.

Why These Protections Exist

The courts have recognized that WSIB rights serve a crucial public policy purpose. In the landmark case Fleming v. Massey, Ontario’s Court of Appeal found the waiver signed by the plaintiff releasing the employer from liability for damages in negligence void on the ground that it would contravene public policy. The Court emphasized that allowing workers to waive their WSIB rights would undermine the entire workers’ compensation system. The court noted that “the public interest in ensuring worker compensation is paramount and cannot be undermined by private agreements between employers and employees.”

It’s true that a release is not the same as a waiver. However, they are substantively similar in nature in that they both attempt to contract an employee’s WSIA rights. A waiver is a pre-accident agreement not to claim WSIA entitlements while a release is a post-accident agreement not to pursue claims under WSIA. In substance, they operate to extinguish an employee’s statutory rights under WSIA with respect to an injury or illness arising in and out of the course of their employment. Section 16 WSIA does not limit itself to “waivers prior to workplace accident” but encompasses private “agreement between a worker and his/her employer.”  A settlement and release agreement is a contract. On this premise of interpretation, an employee cannot contract out of his entitlements under the WSIA by signing the release.

Think of it this way: WSIB isn’t just about individual contracts between you and your employer—it’s a social safety net designed to protect all Ontario workers. The law prevents this protection from being bargained away, even voluntarily.

What About Other Legal Rights?

While your WSIB entitlements are likely preserved, a settlement release will typically prevent you from pursuing other types of legal claims against your former employer, such as:

• Wrongful dismissal claims
• Human rights violations
• Employment standards breaches
• Other tort claims (e.g. negligence) 

This is why it’s crucial to understand exactly what you’re giving up when you sign a release.

The Financial Reality: Potential Benefit Reductions

Here’s where things get more complex. While you can’t lose your WSIB rights, the money you receive in a settlement might affect the amount of Loss-of-Earnings (LOE) benefits you receive from WSIB.

According to WSIB’s operational policies, certain types of settlement payments can be considered “post-injury earnings” that reduce your LOE benefits:

• Pay in lieu of notice is considered earnings and may reduce benefits
• Working notice payments are considered earnings and may reduce benefits
• But: Severance pay under the Employment Standards Act is treated separately and typically will NOT affect your LOE benefits

This means that while you keep your WSIB rights, keep in mind that you might not receive the full amount you expect if WSIB determines that part of your settlement overlaps with the period they’re covering.

Protecting Yourself: Practical Steps

If you’re considering signing a settlement release and have an active or potential WSIB claim, consider these steps:

1. Consult with a lawyer experienced in employment law to understand what rights you’re giving up
2. Speak with a WSIB representative or lawyer about how the settlement might affect your benefits
3. To err on the side of caution, request protective language in the release agreement to preserve your WSIB rights, such as: “For greater clarity, nothing in this Full and Final Release shall release the worker’s rights to claim or receive benefits under the Workplace Safety and Insurance Act, 1997.”
4. Document your workplace injury thoroughly before signing any agreements.

This blog post is for informational purposes only and does not constitute legal advice. Every situation is unique, and you should consult with qualified legal and WSIB professionals before making decisions about settlement agreements or workplace injury claims.