The last payroll run is sometimes treated as the finish line of an employee's departure. It isn't. A payroll statement can show the correct amount of wages and still leave major unanswered questions about vacation pay, banked time, benefit continuation and the reason a payment was made. Those distinctions matter to the employee, the employer and, potentially, Service Canada. Severance and Employment Insurance are different systems. The employer determines its obligations under applicable employment standards, the employment contract, common law where applicable and any negotiated settlement. Service Canada determines Employment Insurance eligibility and the treatment of earnings. A separation payment may be called severance, notice pay, retirement allowance or salary continuation, but its legal characterization and timing can affect reporting and benefits. The federal government's guidance describes temporary measures affecting the allocation of separation earnings. As of October 9, 2026, the published temporary measure provides that separation earnings aren't deducted from EI benefits where the claim or allocation starts within the specified period running from March 30, 2025, to October 9, 2027.
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