If you are let go from a permanent position and are fortunate enough to receive severance pay, you can use it to help you bridge the financial gap between jobs.
What is severance pay?
Severance pay is money and benefits you may be entitled to if you are let go without cause. It is intended to provide financial support to ease your transition from one place of work to another.
Severance pay is not the same as termination pay, which is given in place of the required notice of termination of employment.
What should I do if I am offered a severance package?
Before accepting any severance package, read the severance agreement carefully and consult a lawyer if necessary.
Your package should clearly identify information on severance amounts, your pension amounts, if any, and other benefits or details. Depending on the terms and conditions of your collective agreement or employment contract, if you have one, you may be entitled to additional benefits as part of your severance package.
Most severance agreements allow an employee time to consider them. Use this time to review the offer in detail and get legal counsel if you have any questions or concerns.
Be sure you understand the terms and conditions and find out the answers to any questions you may have, such as:
- How will a severance package affect your Employment Insurance (EI) benefits?
Severance pay is considered to be earnings and could affect the amount of EI benefits you receive as well as the date you begin to receive them.
- Are you being offered benefits such as extended health, dental or life insurance? If so, make sure you understand:
- what will be covered
- how long coverage will last (for your lifetime or for a certain period of time)
- the circumstances in which you can convert your policy to individual coverage, and any fees or premiums associated with the coverage.