You’ve lost your job. This feeling is not easy. Even if you expected this, it still doesn’t feel comfortable. I, myself have been through this situation twice in my life. Even though my career took a positive turn after each of the lay-offs – thinking about them still makes me feel uncomfortable.

As a result, I decided to publish a series of articles on LinkedIn focusing precisely on the moment when someone loses their job.

Part I


The short answer is – do your homework. You have to know what professionals you need to engage, what a fair financial settlement is from a legal standpoint, and what options you can expect in your termination package.

Why do you even need to consider engaging a professional? You might know the bulk of the financial and legal information about this life event – whether it is a potential lay-off, forced retirement, or even a scheduled retirement. You may have read some articles and spoken to people who have been in a similar situation. However, do you possess the experience and expertise of dealing with this event on a regular basis? Think of it – reading and talking about driving could be quite different from getting behind the wheel.


Get independent legal advice

Yes, it might cost you one or two hours of a lawyer’s time, but it is worth it. I cannot elaborate on the specifics of any legal advice simply because I am not a lawyer. However, while conducting several joint presentations with Inna Koldorf, an employment lawyer with Koldorf Stam, LLP, it became evident that had I engaged her at the time of my termination, I would have received a higher financial settlement.

Get independent financial planning advice

There are many considerations you need to take into account when deciding what to do with your financial settlement. Understanding your options and what are the best for your individual situation may not be straight forward.

 Some Considerations to think about

Should you take a lump sum, an income stream or a combination of the two? Is the money available immediately, deferred to a future date or locked-in? What are the tax consequences, guarantees and conditions of each option? Could HR be able to adjust your compensation package to your individual needs? This particular point could benefit you in terms of lower taxation and/or higher guarantees for your surviving spouse, or higher future monthly payments to name a few.

It is important to know the basics before engaging a professional. One of the most important parts of many termination packages is the Retiring Allowance. According to the CRA website, a retiring allowance (also called severance pay) is an amount paid to officers or employees when or after they retire from an office or employment, in recognition of long service or for the loss of office or employment. It includes payments for unused sick-leave credits on termination and additional amounts individuals receive when their office or employment is terminated. It DOES NOT INCLUDE your pension benefits, salary, bonuses, overtime, vacation pay, and some other benefits that might be payable to you.

The main point to remember about the Retiring Allowance is that it is always fully taxable. Your employer is obligated to make a tax deduction on your behalf. However, there are ways to decrease this taxable impact. We will discuss them in detail in Part II of this publication.

Now that you have an idea what a Retiring Allowance is and know where to find more details about it (CRA website), lets briefly look into the other options that could be present in your package:

  • Deferred Pension
  • Commuted value pension (Not always available. Not always disclosed even if available)
  • Registered Pension Plan
  • Locked-In Transfer
  • Health, Dental and Life insurance continuation

In the Part II of this publication I will go over each option and illustrate what can be done to customize and get the maximum benefit from them.