Is a Deceased Employee Entitled to Severance Pay?

Is a Deceased Employee Entitled to Severance Pay?

Dealing with employment-related matters after the passing of an employee can be a complex and sensitive issue. In Ontario, understanding when a deceased employee’s estate may be entitled to severance pay is crucial. This article explores the eligibility criteria and exceptions in such cases.

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:

  • The employer dismisses the employee or otherwise refuses or is unable to continue employing the employee.
  • The employer constructively dismisses the employee, and the employee resigns from his or her employment in response within a reasonable period.
  • The employer lays the employee off for 35 weeks or more in any period of 52 consecutive weeks.
  • The employer lays the employee off because of a permanent discontinuance of all of the employer’s business at an establishment.
  • The employer gives the employee notice of termination in accordance with section 57 or 58, and the employee gives the employer written notice at least two weeks before resigning, with the employee’s notice of resignation 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.
  • An exception exists in section 9 of O. Reg. 288/01: Termination and Severance of Employment.
  • If an employee’s contract became impossible to perform or was frustrated due to the employee’s death, the estate won’t be entitled to severance pay.
  • If the deceased employee received a notice of termination before their death and qualified for severance pay at that time, their estate will be entitled to the severance pay.


In the difficult situation of dealing with the employment status of a deceased employee, it’s important to understand the legalities and exceptions that apply to severance pay. Seek legal advice for specific cases to ensure that the rights of the estate are properly protected.

Contact Achkar Law

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 severance 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.