If you have been terminated and offered a termination package, there are a number of questions that naturally arise out of the entire termination process. One of the less common, but still important, questions that comes up is what happens to your termination package if you pass away? This becomes less of an issue if you pass away after receiving a lump sum into your bank account, however if you are receiving a salary continuance or pass away prior to receiving payment this leaves your family with questions about what happens to that money.
The deceased’s estate would still be entitled to receive the funds from any termination package. This means that the former employer of the decease must pay the entire sum from the termination package to the estate.
In the case of McMaster Estate v. Imark Corp., 2000 CarswellOnt 957, the employee was hospitalized and passed away. Two weeks later, the defendant terminated the deceased’s employment and offered 12 months’ pay in lieu of notice. The executor of the deceased estate accepted the 12-month termination package, however the defendant refused to pay stating that it did not owe the deceased anything. The executor brought an action on behalf of the deceased’s estate for wrongful dismissal.
The Court determined that the employer had an obligation to provide reasonable notice of termination and did not do so. The defendant argued that since the deceased was unable to mitigate (that is, attempt to find new employment), that its obligations to provide a termination package ought to be reduced. The Court disagreed citing Sylvester v. British Columbia (1997), 146 D.L.R. (45th) 207 (S.C.C.) which states that, “the premise that the employee would have worked during the notice period” but cannot due to medical or other reasons does not mean that the employee has failed to mitigate their damages.
Therefore, it is clear that is you pass away prior to receiving the entirety of your termination package, your employer still owes those funds to your estate.
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