YG’s New Voluntary Severance Provision: What you NEED to know

yg severance provision graphic

*New language has been added to the Collective Agreement between YEU/PSAC and the Government of Yukon. Article 19 Severance provides for voluntary early pay-out of severance pay under certain conditions.

It is important to remember this new provision is voluntary only – there is NO requirement to request an early payout of your severance. All other forms of severance such as the provision for layoff remain intact and are unchanged.

Severance is like a deferred long term savings plan. For every year you work you will have one week of pay set aside for when you retire. For employees who plan to work until they retire, the value of severance is 1 week of pay for each year of service, which is like having an additional 1.9% that is set aside annually for you by the employer.

The monetary “value” of severance varies considerably from person to person depending on years of service, your career plan, and the conditions under which you might expect to take severance pay.

Severance is intended to bridge your time between when you retire and when you get your first pension cheque or provide additional pay in the event you are laid off. There are occasions where several months elapse between the date of retirement and receipt of the first pension payment.

How will the new Voluntary Severance Pay-Out article work?

If you voluntarily take an early payout of your severance, the following applies:

  • You can only apply for it when you have at least 5 years of service
  • You can only take it in multiples of 5 year blocks
  • Early payout of severance means you will only be paid 50% of your regular entitlement. Rather than 1 week’s pay for each year worked, you will receive 1 week’s pay for each 2 years of service
  • Severance will be paid out at your current substantive rate of pay
  • There may be additional tax implications

If you voluntarily take an early payout of your severance and you are still employed, there may be additional tax payable. Any additional taxes will be your responsibility and will vary from person to person depending on your personal financial situation.

Another important factor to consider is you more than likely will be at a higher pay level when you retire. This means severance will be paid out at a higher level when you retire. 

*If you cash out early, you will continue to accrue severance, but like a savings account, once you withdraw severance, it is gone. It can’t be replaced or replenished over time.

*We recommend you do not access this provision unless you absolutely have to.


*For reference, the contract language is below
19.10 Severance Voluntary Pay-Out

A regular employee with at least five (5) years of continuous service may elect to have all or a portion of their accrued severance paid out prior to resignation or retirement, subject to the following conditions:

a)    Pay-out must be requested in five-year increments  (e.g. 5 years, 10 years, etc.)
b)    An employee may request a voluntary severance pay-out each time the employee accrues another five year increment of severance.
c)    Request for pay-out must be made by September 30 each year.
d)    Voluntary severance will be paid on the pay day falling immediately after November 1.
e)    An eligible employee is entitled to be paid by the employer severance pay equal to the product obtained by multiplying the employee’s weekly rate of pay by 1/2 by the number of full-time equivalent completed continuous years of service requested for pay-out to a maximum of 28 weeks.
f)    The number of years of voluntary severance paid out will be subtracted from remaining accrued balance of severance for the purposes of Article 19.
g)    An employee’s future earning and accrual of severance shall remain unaffected.
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