14 Sep What is the difference between receiving a salary continuance or a lump-sum payment upon termination?
You may have recently received a termination notice from your employer communicating when your employment relationship will be severed. This notice may have included the payment method your employer has decided to provide you upon your dismissal. The compensation being offered is legally known as “notice pay” or “severance pay”, which is the pay an employee is entitled to upon their termination. However, there are different ways of distributing this pay.
Notice or severance pay can be offered through a salary continuance following the termination date, meaning that your employer will continue to compensate both salary and benefits as they have been throughout your employment relationship. Normally, the amount of salary and benefits will not change from what the employee has received in the past. A salary continuance may be advantageous to an employee because they can continue receiving benefits like life insurance or long-term disability.
If an employee finds new employment within the salary continuance period, the payments from the previous employer will end. When the employee enters a new employment relationship, the employer will then provide a lump sum payment. This lump-sum payment will usually be 50% of the remainder of the salary continuance owed.
If your severance pay is initially provided through a lump sum payment, your entitled compensation will be provided in a single deposit. Further, the lump sum payment could be given in lieu of notice, so this payment would need to reflect the amount of notice the employee was entitled to.
If you require legal counsel to review your termination package or have questions about how much compensation you are entitled to, please contact KCY at LAW by filling in an online consultation request or contact us by phone at 905-639-0999 to book your consultation today.