Recently on payroll and human resource discussion boards there has been interesting conversations about the differences between salary continuance, wages in lieu of notice and retiring allowance. Our payroll department has also been engaging in these conversations with our clients regarding the differences and as an employer what the company is obligated to pay. The following is a brief description of each type of income:
1) Salary Continuance – If upon termination an individual receives periodic payments and remains entitled to benefits available only to employees, for example, long term disability, or the individual continues to accrue pensionable service or continuation in the group RRSP plan, the payments are considered a salary continuance.
2) Wages in Lieu of Notice – Wages in lieu of notice is a payment made to an employee by the employer, rather than the employee working notification.
3) Retiring Allowance – Is income available to employees at the time of retirement. A retirement allowance (also called retiring allowance) is defined in the Income Tax Act as “an amount received on or after the retirement of an employee in recognition of long service or in respect of a loss of an office or employment. The amount, which may be paid by installments, may be received by the former employee, or after his or her death, by a dependent or a relation or by the former employee’s legal representative.”
For further information on this topic please see attached link: http://alanrmcewen.com/2013/03/29/when-does-employment-end-what-is-employment-versus-other-income/
Kristine Williams PCP / Team Lead Payroll Services / PEO Canada