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A teacher (=pl) had been working at a school (=def) for 10 years and was let go. A year later pl sued for vacation and severance payment, which are required by law. Def says that they made an oral agreement every year and, in the last year, a written agreement, that pl relinquishes claims to such rights and receives only an hourly wage.
Ruling: Severance pay is not a Torah obligation. However, it has long been considered a proper practice, inspired by the Torah law of a present when setting free a Jewish slave. The Sefer Hachinuch (482) suggests adopting the practice, and it has become a widespread practice, which has been accepted as law in Israel. In general, one of the strongest rules in monetary law is to follow the practices of the land (Bava Metzia 83a). Although the Haghot Oshri (ad loc.) says that local practice is binding only if the place’s leading rabbis endorse it, that is only when the practice contradicts a Torah law. Here, where the practice is in the spirit of the Torah, it should be binding. Rav Uziel claimed that this practice should not be binding because its implementation did not spread, but in the decades since, it has spread, he would presumably agree.
However, the rule of following a practice is opposed by the rule that two sides to an agreement can agree to change normal conditions including those mandated by the Torah (Tosafot, Bava Metzia 83a). Although pl claims that he did not know that he was signing a waiver of his rights, we do not trust one who says he did not read an agreement he signed (Shulchan Aruch, Choshen Mishpat 45:3).
Pl claimed that he signed the waiver only because he was afraid they would fire him, and he needed the money. This is not a valid claim since they had the right to fire him (and pay severance), and it was his right to choose between the different options. This is considered extenuating circumstances one places on himself. Only if he made a formal statement in front of two witnesses that he did not mean what he was "agreeing to" can he undo the agreement. Although severance is a future consideration and usually one cannot relinquish rights to something whose time has not come, one can agree that rights will not start in the first place (see Bava Kama 92b, regarding one who says: "Rip my clothes and you will not have to pay"). Additionally, in the signed agreement, it says that he admits to having received all of the rights he deserves, and we say that one’s admission is binding.
Pl’s final claim is that he was unaware that the rights in question were coming to him by law, and therefore his relinquishment was based on a mistake. However, he cannot extract money based on that claim because, according to some poskim, even a mistaken relinquishment is valid if it is in writing. Furthermore, we have no reason to believe pl that he was unaware.
P'ninat Mishpat (832)
Various Rabbis
155 - Damages Done by a Worker
156 - Rights for a Worker Who Agreed to Substandard Conditions
157 - Paying for Construction Work That Was Destroyed by the Authorities
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Various Rabbis
Various Rabbis including those of of Yeshivat Bet El, such as Rabbi Chaim Katz, Rabbi Binyamin Bamberger and Rabbi Yitzchak Greenblat and others.

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