You all know what severance pay is do you not?

Severance pay is pay (and sometimes benefits) an employee receives when he or she leaves employment. Severance pay is most typically offered for employees who are laid off or retire.

Just recently the the Canadian Government, Treasury Board Branch, has forcibly modified the collective agreements of these three groups PA, SV and EB  so that Severance Pay is no longer paid upon retirement. It is still available if you are laid off.

PA Program and Administrative Services	SV Operational Services	EB Education and Library Science
Administrative Services (AS)	Firefighters (FR)	Education (ED)
Information Services (IS)	General Labour and Trades (GS)	Library Science (LS)
Programme Administration (PM)	Heating, Power and Stationary Plant Operations (HP)	Library Science (LS)
Welfare Programmes (WP)	Hospital Services (HS)
Communications (CM)	Lightkeepers (LI)
Data Processing (DA)	Ships’ Crews (SC)
Clerical and Regulatory (CR)	Printing Operations (Advisory) (PR(S))
Office Equipment (OE)	Secretarial, Stenographic and Typing (ST)

When I say forcibly modified, I mean, they said to the Union negotiators for those three groups that this is the new law and Treasury Board will not negotiate over anything else until you accept it. It was pretty blunt.

For the employee, any accumulated credits towards severance pay destined for lay off or retirement will be paid out now. Severance pay credits will cease to accumulate. More information here on the PSAC union website.

The employees have three options:

1) immediately cash out the severance you have accumulated, or
2) keep the accumulated severance and have it paid out when you actually resign or retire, or
3) immediately cash out part of the accumulated severance and keep the rest of it to be paid when you resign or retire.

This is devastating to these employees. For example a lightkeeper that has 10 years of service. He will receive 10 weeks of pay (2-1/2 months) in cash, but if he worked until his planned retirement he would receive 30 weeks severance pay – something to look forward to, and to help out getting settled in retirement. I know it helped me when I retired in 2001.

This will come as a shock to most employees but a quote from the PSAC website entitled:The value of wage increases compared to the value of severance says:

 If this agreement is accepted, the accumulation of future severance for resignation or retirement will end as of the second day of the new contracts. Under the current contract, if you were to stay until you retire, you would earn one week of pay for each year of service (up to a maximum of 30 weeks). That would be about $1,000 per year based on your current salary.  But if you resigned under the current agreement you would have been entitled to one-half week’s pay per year – or $500 per year – provided you have at least 10 years of service.

In considering the overall value of the contract, however, you need to consider that the wage increases compound to 5.3% of salary. If you are currently making $52,000 a year, then by the third year of the contract you’ll be making $54,778 – an increase of $2,778. That’s a lot more than the $500-$1000 per year of service than the severance is worth.  Before even considering future increases, that multiplies out to more than $52,000 over 20 years – far more than the value of what your severance would have been.  Furthermore, the wage increase turns into increased overtime rates and higher pensionable earnings.  – Public Service Alliance of Canada (PSAC) (bargaining union for lightkeepers) 

But I would say, I am still missing out on my severance pay, right? And my question would be, why just these groups? They are certainly not the highest paid in the Civil Service.

If anybody has more input please comment.

There is a lot more involved in this. read the PSAC pages above to get the full idea.

Also read the article about Severance Pay from the lightkeepers Agreement (section 60).