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Is a Deceased Employee Entitled to Severance Pay?

A deceased employee is entitled to severance pay only under specific circumstances.

What is Severance Pay?

Severance pay is given to long-term employees that have had their employment “severed,” and is meant to compensate an employee for intangible losses such as loss of seniority. This type of pay is different than termination pay, which is given to employees in lieu of the required notice period an employee is entitled to upon receiving notice of the termination of their employment.

When is Employment “Severed”?

Under section 63 of the Employment Standards Act, 2000 (“ESA”), an employee’s employment is severed by the employer if:

  1. the employer dismisses the employee or otherwise refuses or is unable to continue employing the employee;
  2. the employer constructively dismisses the employee and the employee resigns from his or her employment in response within a reasonable period;
  3. the employer lays the employee off for 35 weeks or more in any period of 52 consecutive weeks;
  4. the employer lays the employee off because of a permanent discontinuance of all of the employer’s business at an establishment; or
  5. the employer gives the employee notice of termination in accordance with section 57 or 58, the employee gives the employer written notice at least two weeks before resigning and the employee’s notice of resignation is to take effect during the statutory notice period.

Who is Entitled to Severance Pay?

Under section 64 of the ESA, an employee is entitled to severance pay if their employer severs the employment relationship, the employee has been employed for 5 years or more, and the employer has a payroll of $2.5 million or more.

An employee that has been employed for less than 5 years will be entitled to severance pay only if the severance is a result of the permanent discontinuance of all or part of the employer’s business and the employee part of a group of 50 or more employees who have had their employment severed within a 6 month period.

When is a Deceased Employee Entitled to Severance Pay?

In general, a deceased employee’s estate is not entitled to severance pay. However, the ESA does provide one exception to this rule, found in section 9 of O. Reg. 288/01: Termination and Severance of Employment.

Under this section, an employee whose contract of employment has become impossible to perform or has been frustrated is not entitled to receive severance pay. If an employee’s contract has become impossible to perform or it has been frustrated due to the death of the employee, the employee’s estate will still not be entitled to receive the employee’s severance pay. However, if the deceased employee received a notice of termination before their death, and at the time they received the notice the employee qualified for severance pay, then the employee’s estate will be entitled to their severance pay.

Contact Us

If you are the estate of a deceased employee looking to receive severance pay, or an employer who is dealing with a matter pertaining to a deceased employee, our team of experienced workplace lawyers at Achkar Law can help. Contact us today at +1 (800) 771-7882 or email [email protected] , and let us help you find the solutions you need to move forward. 

If you are a small or medium-sized company looking for full-service support with same day response, visit our CLO Program page for our strategic solutions.

Disclaimer: This blog is not intended to serve as or should be construed as legal advice and is only to provide general information. It is in no way particular to your case and should not be relied on in any way. No portion or use of this blog will establish a lawyer-client relationship with the author or any related party. Should you require legal advice for your particular situation, fill out the contact form, call +1 (800) 771-7882 or email [email protected].