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. Understanding when a deceased employee’s estate may be entitled to severance pay is crucial in Ontario. This article explores the eligibility criteria and exceptions in such cases.

What Is Severance Pay?

Severance pay compensates long-term employees whose employment has been “severed,” addressing intangible losses such as loss of seniority. It differs from termination pay, which is given in lieu of the notice period an employee is entitled to upon receiving notice of termination.

When Is Employment “Severed”?

Under section 63 of the Employment Standards Act, 2000 (ESA), an employee’s employment is considered 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 within a reasonable period.
• The employer lays off the employee for 35 weeks or more within 52 consecutive weeks.
• The employer permanently discontinues all business operations at an establishment.
• The employer gives notice of termination, and the employee resigns with written notice at least two weeks before the end of the statutory notice period.

Who Is Entitled To Severance Pay?

Under section 64 of the ESA, an employee is entitled to severance pay if:

• The employment relationship is severed by the employer.
• The employee has been employed for five years or more.
• The employer has a payroll of $2.5 million or more.

Employees with less than five years of service are entitled to severance pay only if the severance results from the permanent discontinuance of all or part of the employer’s business, affecting a group of 50 or more employees within six months.

When Is A Deceased Employee Entitled To Severance Pay?

In general, a deceased employee’s estate is not entitled to severance pay. However, an exception exists under 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 their death, the estate is not entitled to severance pay.
• If the deceased employee received a notice of termination before their death and qualified for severance pay, their estate is entitled to the severance pay.

Conclusion

Handling the employment status of a deceased employee is challenging, and understanding the legalities and exceptions regarding severance pay is essential. Seek legal advice for specific cases to ensure the rights of the estate are properly protected.

Contact Achkar Law for Severance Guidance

If you need assistance with severance pay issues or other employment law matters, the experienced team at Achkar Law is here to help. Our knowledgeable severance lawyers can provide personalized legal advice and support to ensure your rights are protected.

Contact us today to schedule a consultation and get the legal guidance you need.

• Phone: 1 (800) 771-7882
• Email: [email protected]