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ARTICLE · 07 NOVEMBER 2011

The HR Space: Post-Termination Disability Benefits Reduce Severance Pay

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Severance obligations can of course be costly for employers. An often-tricky issue is the impact of post-termination income on the obligations of the terminating employer.

CanadaEmployment and HR
Hadiya Roderique
Hadiya Roderique
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Severance obligations can of course be costly for employers. An often-tricky issue is the impact of post-termination income on the obligations of the terminating employer. Employees are often under the mistaken impression that they have a unconditional entitlement to a large lump sum severance payment -- even if they were to quickly start a new job -- and even if they receive other income during the period for which they are entitled to notice of termination or pay in lieu of notice.

A recent Ontario court decision, Jensen v. Schaeffler Canada (PDF), has provided some guidance on the impact of one form of post-termination payments - workers' compensation benefits. This case may have a bearing on how various kinds of post-employment income should be treated in assessing employees' entitlement to damages for wrongful dismissal.

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