Can a severance payment be considered as a benefit to an employee for breach of contract?

Benefit connotes some advantage or betterment. Severance payments cannot be considered as bestowing any advantage or betterment on the recipient. They are intended to place the employee in the position he or she would have been in but for the breach of contract. Unlike a bonus or employer pension contribution, there is no advantage bestowed (Hans v. STU, 2016 at [29]).

In the event of termination of employment without cause, the employee is entitled by law to recover damages. Absent an agreement or settlement, the employee’s only recourse is to commence an action for wrongful dismissal. Severance payments made either to avoid litigation or to settle actual or contemplated litigation cannot be said to be discretionary (Hans v. STU, 2016 at [30]).