Does an employee get severance pay if they die?

Severance pay after an employee dies

An employee (or their estate) doesn’t get severance pay if they pass away because the employment contract is considered ‘frustrated’ due to the impossibility of continuing the job. However, If an employee was given a termination notice and qualified for severance pay before they died, their estate can still claim that severance.

Severance entitlement after termination

If an employee is terminated and subsequently passes away, the employer’s obligation to pay severance is determined by the circumstances at the time of termination. The death of the employee does not eliminate the employer’s liability for severance. This is similar to cases where an employee becomes disabled after being terminated; the severance entitlement remains based on the situation at the time of firing.

• Example: Consider an employee who was fired without severance and was entitled to 12 months’ pay. Six months after the termination, the employee becomes terminally ill and passes away. In this case, the employee’s estate is still entitled to the full severance owed, as the entitlement is not affected by the employee’s inability to work after termination.

What if the employee dies or becomes terminally ill before termination?

The situation changes if the employee dies or becomes terminally ill before they are terminated. In some cases, this may reduce or eliminate the entitlement to severance, depending on the jurisdiction.

• Alberta and British Columbia: If an employee is no longer able to perform their duties due to illness or injury, resulting in the impossibility of continuing employment, the contract is considered “frustrated.” In these cases, the employee is not entitled to a severance package in Alberta or British Columbia.
• Ontario: The rules are more nuanced. If an employee dies suddenly while still employed, no severance is owed due to frustration of contract. However, if an employee becomes terminally ill, they are still entitled to minimum severance pay under Ontario’s Employment Standards Act (ESA). The amount is less than what would be owed for a regular termination but still provides some compensation.

Additional considerations

For employees who are disabled or severely ill, it’s crucial to review the relevant disability policy with a disability lawyer at Samfiru Tumarkin LLP before pursuing severance. Disability benefits might exceed severance pay, and securing these benefits should be the priority. Additionally, a two-year limitation period applies, so timely legal advice is essential.

Get legal insight

Death does not always end the right to severance pay. If you or a family member has been terminated and then passed away, the employment lawyers at Samfiru Tumarkin LLP in Ontario, Alberta, and British Columbia can help the estate collect the severance that is owed.

Let Canada’s most positively reviewed law firm provide the advice you need and the compensation you deserve.