Changes to Severance Benefits - 29 March 2012

Changes to Severance Benefits

Severance benefits for voluntary departures are typically not offered by private sector employers. In addition, ending the accrual of severance benefits for retirement and resignation will help provide financial predictability for the Government in times of fiscal restraint.

In this current context, the Government signed collective agreements with bargaining units representing over 95,000 public servants that included the elimination of severance for voluntary departures.

Since compensation for the CAF is benchmarked to that of public servants, these changes now also apply to CAF members.

The changes to the severance benefit will be at no additional cost to Canadians. These changes respond to the need for both fiscal responsibility and financial predictability.

Under previous severance benefit provisions, all members voluntarily releasing (release Item 4(c)) with less than ten years of eligible service received no benefit. Regular Force members releasing voluntarily with ten or more years of eligible service received a benefit calculated at 3.5 days of pay per year. A Reserve Force Retirement Gratuity (RFRG) benefit for eligible Reserve Force members releasing voluntarily with ten to twenty years of eligible service was calculated at 3.5 days of pay per year; with twenty or more years of eligible service, it was calculated at 7 days of pay per year.

Under the new provisions, all severance benefits will be calculated at 7 days of pay for every year of eligible service, including partial years. The requirement to have a certain number of years before being eligible for severance benefits when voluntarily releasing has been eliminated. In addition, eligible Reserve Force service will be calculated based on elapsed time rather than paid service.

For CAF members, the accumulation of years of eligible service ceases:

• Effective October 1, 2011: for General Officers, Colonel, and Legal officers in the rank of Lieutenant-Colonel and above
• Effective the date of promotion: for members promoted to the substantive rank of Colonel and above, and to legal officers promoted to the substantive rank of Lieutenant-Colonel after September 30, 2011 and before March 1, 2012
• Effective March 1, 2012: for all other CAF officers and Non-commissioned members (excluding military judges)
• Exception: the accumulation of years of eligible service continues for a member who is released for medical reasons (release Items 3(a) and 3(b)), and involuntarily releases (release Items 5(b), 5(d), 5(e), or 5(c) where the member has not reached retirement age under QR&O Chapter 15 but has completed the period of obligatory service because of a change in classification, trade specifications, or in the establishment requirements of the CAF), or who is released by reason of death.

Severance benefits are earned at the rate of one week per year of eligible service, payable to a maximum of 30 years in a member’s lifetime.