Lump sum or salary continuance?

Employee request for lump sum severance payment
By Colin Gibson
|Canadian Employment Law Today|Last Updated: 06/26/2013

Question: A dismissed employee has been offered a severance package with continuation of the employee’s salary for a specified period. However, the employee has made a formal request to receive her severance in a lump sum payment. Is the employer required to comply with this request, or does the employer get to decide how to structure the package?

Answer: The answer depends on factors such as jurisdiction, whether the employment contract defines the severance package, and whether the employer is in the public or private sector.

Employment standards statutes across Canada are generally uniform in their approach to severance payments made in lieu of statutory notice of termination: such payments must be provided in a lump sum. Under the Ontario’s Employment Standards Act, 2000, where an employer pays severance instead of giving working notice, the employer must also pay the applicable benefit premiums over the statutory notice period.