If you’ve been injured in an accident and later terminated by your employer, you may be wondering: Can severance or termination pay be deducted from a personal injury damages award? This is an important question for individuals negotiating a personal injury settlement in Alberta, especially when job loss follows an accident.
The short answer: No, severance payments are generally not deducted from personal injury damages for lost income.
Severance Pay vs. Personal Injury Damages: What’s the Legal Distinction?
Under Alberta law and broader Canadian case law, severance pay and personal injury compensation are considered legally distinct. Courts have held that termination payments represent more than continued salary—they often reflect compensation for:
- Surrender of legal rights as a long-term employee
- Loyalty and years of service
- Non-solicitation or non-competition agreements
- Loss of employee benefits
Therefore, severance should not reduce the amount a plaintiff is awarded for past or future loss of income caused by a third-party injury.
Key Case: Flammia v. Canada Bread
In the case of Flammia v. Royal Glen Eagle, 2014 ONSC 7522, the plaintiff sustained a traumatic brain injury after falling from a golf cart operated by an employee of the defendant during a corporate event. Although Mr. Flammia returned to work temporarily, he was later demoted and ultimately terminated from his role as Vice-President at Canada Bread.
Mr. Flammia received a severance package that included compensation for loss of a vehicle allowance and a non-solicitation agreement. He claimed that but for the injury, he would still be employed.
The Legal Dispute: Should Severance Be Deducted?
The defendant argued that the severance should be deducted from any damages awarded for loss of income, treating it as a form of employment income. Mr. Flammia, however, cited a line of cases asserting that private payments (like severance or insurance) are not to be deducted from tort damages, under the principle that a defendant should not benefit from a plaintiff’s contractual or private entitlements.
The Court’s Decision
The Court ruled in Mr. Flammia’s favour, stating that it would be unfair to force plaintiffs to dissect severance payments into wage versus non-wage components. The Court held:
“If the jury awards damages for past or future loss of income, no deduction should be made for the severance package received.”
This decision aligns with broader Canadian jurisprudence.
Key Takeaway for Calgary Injury Victims
If you were injured due to someone else’s negligence and subsequently lost your job, any severance you receive should not be deducted from your personal injury settlement for lost wages.
Whether your injury was the direct cause of your termination or merely contributed to it, Alberta courts support your right to pursue full compensation for loss of income, without reduction for severance payments.
Contact Information
If you have been injured in a motor vehicle accident and are seeking advice regarding your rights, contact Crash Lawyers today.
Please note that we are not employment lawyers. If you’re looking for an employment lawyer, contact Cashion Legal today. They can assist you with workplace issues arising from the injuries suffered in your motor vehicle accident, including severance pay.