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ARCHIVED - Termination of Employment


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1 General

The employee or the employer can terminate employment for any of the following reasons:

abandonment of a position

Voluntary and unauthorized absence from duty for a period of one week or more (abandon de poste) (PSEA section 27, repealed 1992)

death

Involuntary or voluntary cessation of life (dcs)

end of specified term

Termination of employment at the end of a specified period for which an employee was hired (fin dela priode dtermine) (PSEA 25)

incapacity

Termination of employment or demotion to a position at a lower maximum rate of pay for reasons other than breaches of discipline or misconduct (incapacit) (FAA 11(2)(g))

incompetence

Termination of employment or suspension that may be applied for breaches of discipline or misconduct (incomptence) (FAA 11(2)(f))

involuntary termination

Involuntary termination of an employee's services because the employee failed to be appointed to a position during the period of leave of absence priority (cessation d'emploi involontaire) (PSEA 30(4))

lay-off

Involuntary termination of an employee's services because of lack of work or discontinuance of a function (mise en disponibilit) (PSEA 29(1))

resignation

Voluntary cessation of employment by an employee, other than at the end of a specified term (dmission) (PSEA 26)

retirement

Voluntary separation where the employee's entitlement is an immediate annuity occurring

  • at age 60 or over with 2 or more years of pensionable service;
  • at age 55 with 30 or more years of pensionable service;
  • on health grounds with 2 or more years of pensionable service (retraite)

termination for cause

  • involuntary termination of employment for such reasons as incompetence or incapacity; or
  • voluntary termination of employment for such reason as abandonment of position (renvoi pour cause)

1.1 Struck-off strength date

Where the employer accepts in writing an employee's written resignation to be effective on a specified date, the employee will cease to be employed at the close of business on that specified date.

Example 1

The last day of employment, whether paid or unpaid, for the employee is Wednesday, July 16, 2003, and the struck-off strength (SOS) date is Thursday, July 17, 2003.

Example 2

The last day of employment, whether paid or unpaid, for the employee is Friday, July 18, 2003, and the SOS date is Saturday, July 19, 2003.

1.2 Entitlement to remuneration for a holiday

On termination of employment, an employee shall not be paid for a holiday that both follows and is contiguous to the last day of employment.

Example

The employee submits notice of resignation to be effective Tuesday July 1st, 2003. The resignation should be accepted as of the close of business on June 30, 2003, and no entitlement exists for the July 1, 2003, holiday. The employee's SOS date is Tuesday, July 1, 2003.

1.3 Struck-off strength date while contributor is on authorized leave without pay

When an employee is on authorized leave without pay, the effective date on which he or she ceases to be employed is the day following the date the deputy head of the employing department accepts the employee's written notice of resignation and notifies the Minister (Superannuation Directorate) in writing that the employee has ceased to be employed.

Note: There have been special situations where, for pay purposes, the employer can terminate an employee on a certain date; however, for pension purposes, the Public Service Superannuation Act (PSSA) determines an alternate date.

(Reference SAM 2-2-3)

2 Death

2.1 Pay for the month of death

Pay for the full month in which an employee dies shall be provided to the employee's estate where the employee has been employed for a continuous period of one year or more.

The entitlement due is the amount for the period worked, plus the amount that would have been payable had the employee worked the regularly scheduled hours during the balance of the month.

When an employee is on authorized leave without pay and dies, the employee's estate is entitled to payment for the full month of death even though the employee had received no earnings in that month.

The above applies equally to part-time and seasonal employees.

In computing the required year of continuous service for a seasonal employee who is eligible to return to duty each season without further certification, the off-season does not break the continuity of service; only the season of employment is counted.

Example

Employee works four (4) months per year.

Employee would have to work three (3) years at four (4) months per year to meet the criteria of having been employed for a continuous period of one (1) year or more.

Payment may not be made where death occurs

  • during the off-season in the case of a seasonal employee;
  • during a period when the employee is under suspension; or
  • during a period when the employee is absent without authorized leave.

Payment may be made to the estate or to an individual, subject to the restrictions contained in the Payments to Estates Regulations.

For income tax purposes, only that portion of the month's pay up to and including the date of death is income of the deceased employee. The remainder is a death benefit as defined by the Income Tax Act and is therefore income of the recipient. Reference should be made to the Public Works and Government Services Canada (PWGSC) Compensation Directive 1989-089, dated June 14, 1989, for further information.

Where notice of death is not received before issue of pay for the month, no adjustment is made in the tax already deducted, but the recipient of the death benefit may obtain any necessary adjustment when filing an income tax return.

2.2 Death gratuity for a non-participant employee under the Supplementary Death Benefit Plan (section 51 of the Public Service Terms and Conditions of Employment Regulations, PSTCER)

Where an employee who is not a participant under the Supplementary Death Benefit Plan dies while in the Public Service after having been at least two (2) years therein, an amount equal to his or her salary for two (2) months shall be paid to the surviving spouse or, if there is no surviving spouse, to the estate or to such other person as the Treasury Board determines.

Employees working on an as-and-when-required basis as well as persons hired under the part-time worker exclusion order are also entitled to the two (2) month death gratuity.

In computing the required two (2) years of service, the following conditions apply:

  • it is based on continuous employment;
  • in the case of a seasonal employee, only the season of employment is included;
  • service with a corporation or branch of the Public Service that is not within the definition of Schedule I Service of the Public Service Superannuation Act (PSSA) may not be included.

When determining whether an employee died while in the Public Service, remember that this refers to the period of employment and not to the time of actual work. The following conditions apply:

  • absence on authorized leave without pay does not affect payment of the gratuity;
  • the gratuity may be paid in respect of a seasonal employee even though death occurs during the off-season period, provided that the employee would have been eligible to return to duty at the commencement of the next season without further certification;
  • absence of the employee from duty on suspension at time of death does not affect the eligibility of the surviving spouse for the gratuity;
  • the fact that the surviving spouse is entitled to a gratuity pursuant to some other act does not affect entitlement to the gratuity under this section.

As stated above, the gratuity is payable to the surviving spouse or such other person as Treasury Board determines. It is the responsibility of the employing department to establish proof of death and the existence of a surviving spouse.

Where there is a surviving spouse and no reason is put forward by any other person for not making payment to the surviving spouse, the gratuity will be paid to that person without reference to the Treasury Board.

Where there is a surviving spouse but some other person puts forward a reason why the payment should not be made to that person, reference will be made to the Treasury Board for determination of the person to whom payment will be made.

For cases where there is no surviving spouse, the Treasury Board has made a blanket determination of the payee where under the Receiver General shall, on application of the deputy head, pay the gratuity to the executor or administrator of the estate of the deceased employee or, if there is no executor or administrator of the estate, to the person who, being related to the deceased, assumes responsibility for payment of the debts and funeral expenses of the deceased employee. Such person must file with the Receiver General a statutory declaration and undertaking, Schedule I of the Payments to Estates Regulations, supported by releases from all other persons entitled to share in the estate, Schedule II of the Payments to Estates Regulations.

Where there is no surviving spouse and the circumstances are not covered by the blanket determination of the Treasury Board referred to above, direction of the Treasury Board will be obtained.

The submission to the Board must also be supported by a completed statutory declaration form, Schedule I of the Payments to Estates Regulations, if some other individual has requested payment.

The gratuity is not income of the deceased for taxation purposes but rather is a death benefit within the meaning of the Income Tax Act. (Refer to the module entitled "Deductions from Pay.")

2.3 Salary

To determine the salary for the month of death or for the two (2)-month death gratuity, include only those allowances that form part of compensation for the duties of the position. This includes any allowances, such as bilingual bonus, supervisory differential, or terminable allowance, related to the duties of the position other than those payable only while the employee is performing certain specified duties that the employee was authorized to be paid at the time of death.

Where the compensation is authorized at other than an annual or monthly rate, the payment for the two (2)-month gratuity is calculated by dividing the average annual earnings by six (6).

Example: (employee working 40 hours a week with an hourly rate of $16.83)

The annual salary is as follows:

40 hours x 52.176 weeks per year = 2087.04 hours per year
$16.83 x 2087.04 = $35,124.89

The two (2)-month death gratuity is as follows:

1/6 of $35,124.89 or $5,854.15

For those employees working on an irregular basis, such as part-time or on an as-and-when-required basis, their salary should be averaged over a six (6)-month period to determine the benefit payable. The six (6)-month salary is multiplied by two (2) to calculate the average annual salary:

  • divide the result by 260.88 to find a daily rate to be used for paying the month of death; and
  • divide the result by 1/6 to find the amount payable for the two (2)-month death gratuity.