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FREQUENTLY ASKED QUESTIONS AND ANSWERS

My employer offered me a lump sum or salary continuance; which one do I want?

The answer to this question is partly a financial one, and we cannot give you financial advice. We can however (provided you authorize us to do so in writing) connect with your financial advisors, and work together to make sure your package is set up in the best way possible for your personal finances.

Both amounts are based upon what we call a ‘notice period,’ or how long it would reasonably take you to find similar employment. The lump sum pays out that amount of your earnings into one payment, whereas salary continuance stretches it out as regular salary payments, as though you were still on payroll for the entire period. Depending on the length of your notice period there may be tax implications (earning a large amount of income within a tax year instead of spreading it out) and other financial considerations that you will want to weigh. 

From our perspective, a lump sum generally will not have any conditions attached to it, which could let you retain that income while seeking a new job earlier. It also guarantees your payment amount, and may be more tax-effective depending on your circumstances. An offer of salary continuance will likely come with a ‘claw back,’ wherein you will have to let the employer know as soon as you’ve found new work, and once you are re-employed you will likely have to forfeit 50% of the remaining amount. Your employer is not supposed to provide you a windfall, but they are responsible for ‘keeping you whole’ until you find something new. 

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Rudner Law
15 Allstate Parkway
Suite 600
Markham, ON
L3R 5B4

Phone: 416-864-8500
Text: 416-864-8500

Email: info@rudnerlaw.ca

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