Does a deceased employee have a right to severance?

Severance pay after an employee dies

ANSWER: A dead employee’s estate is entitled to severance pay, in some cases. Their death following a termination does not stop an employee’s estate from collecting the severance that the deceased employee should have been paid.

If an employee is fired, and then several months later that employee dies, the employee’s estate can still pursue severance. This is because the employer’s liability to pay severance is based on the circumstances that existed at the time of firing, and is not based on what happens afterward. This is similar to an employee who becomes completely disabled after they are fired.

Example

Let’s say an employer terminates an employee without severance, and that employee was supposed to be entitled to 12 months’ pay. However, 6 months after the employee is fired, she becomes terminally ill, resulting in her death only a few weeks later. Does the employee’s estate still have a right to severance? After all, had she not been fired, she would not have been able to work. In this case, the employee’s estate is still entitled to be paid the full amount of severance owed. In other words, the fact that an employee could not have worked in the period after they were fired does not necessarily reduce the entitlement to severance.

What if the employee dies or becomes terminally ill before they are fired?

An employee who dies or becomes terminally ill before they are fired may have lesser entitlements to severance, and in some cases, may have no entitlement to severance at all.

• Alberta and British Columbia: If employment becomes impossible due to an employee no longer being able to perform his or her duties, that employee is not entitled to any severance. This is known as “frustration of contract”, which means that the contract has ended due to an unforeseen event that is not the fault of either party.
• Ontario: The answer is more complicated. If an employee in Ontario dies suddenly while they are still employed, the rule is the same and no severance is owed. In addition, if the employee is no longer able to work due to illness or injury, the law still considers the employment “frustrated”.

However, an employee who becomes terminally ill while employed is still entitled to their minimum statutory termination pay and severance pay under Ontario’s Employment Standards Act, 2000, even if that terminal illness is the sole reason why they could no longer work. The employee is entitled to severance, but it is much less than they would be owed for a regular termination. Importantly, the employee may pursue this entitlement even if the employer refuses to acknowledge that employment is no longer possible.

Other considerations

For employees who are disabled or severely ill, the first step should always be to review the disability policy in question with a lawyer first. Entitlements under a disability policy may greatly exceed the entitlement to severance, and it is important to make sure you secure that entitlement (if applicable) before turning your mind to severance. Above all, it is critical to remember that a limitation period of two years applies, so it is always advisable to speak with an employment or disability lawyer as soon as possible.

When it comes to severance, death is not always the end. If you have lost your job due to terminal illness or a member of your family has passed away after they were fired, the employment lawyers at Samfiru Tumarkin LLP in Ontario, Alberta, and British Columbia can help you or your family member’s estate collect the severance that is owed.

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