What happens to an employee's benefits when their employment ends?
Voluntary Termination (e.g. resignation or retirement)
- Benefits end on the employee's last working day.
Involuntary Termination (e.g. layoff or dismissal)
- The statutory notice period depends on the employee’s length of service.
- During this notice period, all benefits must be continued as normal. Benefits terminate when the notice period ends.
What is the statutory notice period and why does it matter for benefits?
The Employment Standards Act (ESA) is the provincial or territorial legislation that outlines minimum employment standards, including termination notice requirements. Employees who are terminated without cause are entitled to either a minimum statutory notice period or pay in lieu of notice, as determined by their province or territory.
The statutory notice period is the minimum required by law and varies across provinces and territories.
Refer to the statutory notice periods page for a summary of the requirements in each jurisdiction.
Can benefits continue after termination?
In some cases, benefits may be extended beyond the statutory notice period, particularly when a separation or severance agreement is in place. In such situations, an Extension of Benefits request must be submitted to the insurance carrier for approval. Coverage extension is subject to the terms and discretion of the carrier.
General overview:
- Health and Dental: Can be extended by all carriers.
- Life Insurance and AD&D: May be extended depending on the carrier.
- Out-of-Country/Travel Insurance: Cannot be extended; coverage ends at the conclusion of the notice period.
- Long-Term and Short-Term Disability (LTD & STD): Typically cannot be continued beyond the notice period unless the carrier offers a specific severance rider or exception. Most carriers enforce "actively at work" requirements that limit continuation.
What are the best practices for employers?
- Before proceeding with any benefit extensions, please connect with our Sterling Support team at support@sterlingbrokers.com to ensure carrier approval.
- Include Life/AD&D/Disability extension details in severance agreements or termination letters.
What is the Life Insurance Conversion Privilege?
The Life Insurance conversion privilege allows an employee to convert their Group Life Insurance coverage into an individual policy without providing medical evidence (i.e., no health questions or medical exam), as long as they apply within 31 days of their group coverage ending.
Depending on the insurance carrier, this conversion option may also be available for Dependent Life Insurance coverage.
Employees can contact our Sterling Support team at support@sterlingbrokers.com to request the appropriate application form and for assistance with next steps.
What health & dental coverage options are available for terminated employees?
When an employee's group benefits coverage ends due to termination, they have the option to purchase individual health and dental insurance directly from the carrier. This can help ensure continued access to healthcare services without a gap in coverage.
While these individual plans are not part of the group benefits program, terminated employees may be eligible to apply for coverage without completing a medical questionnaire, provided they apply within 60 days of their group coverage ending.
Various insurers offer personal health and dental insurance plans that terminated employees can apply for directly. A couple of well-known options include:
Employees are responsible for applying and paying for the coverage themselves.
It’s recommended that employees contact the insurance provider directly for details, pricing, and plan comparisons.
These links can be provided to departing employees as part of their termination package to support a smooth transition.