Rules and Procedure on Long Service Gratuity

Effective Date: April 1, 2018
Responsibility: Vice-President, People and Culture

DEFINITIONS

Long Service Gratuity: A lump sum payment provided, if eligible, at time of election for an immediate pension, also commonly known as “LSG”.

Retirement Leave: A long service gratuity entitlement (or part thereof) used as a period of leave with pay in lieu of a lump sum payment.

RULES AND PROCEDURES

Note: Governing policies and procedures for unionized employees found in the applicable collective agreements apply if they differ from this Policy and its subsidiary instruments.

  1. An employee who had permanent status before April 1, 2005 is entitled to a long service gratuity as outlined below.
  2. An employee hired on or after April 1, 2005, or a temporary or contract employee who became permanent on or after April 1, 2005, is not entitled to long service gratuity.
  3. Long service gratuity is paid, if eligible, upon a retirement with immediate pension, or upon submission of a properly authorized document of the death of an eligible employee (equivalent in the form of a death benefit payable to estate).

    Note: For retirement with immediate pension, an employee must:

    • Be a member of the CBC Pension Plan;
    • Be entitled to a pension; and
    • Retire on the last calendar day of the month (i.e., no break between active service and retirement).
  4. Long service gratuity entitlement is based on the following terms and conditions: (See Appendix A – Estimated Long Service Gratuity.)
    1. An employee with 3 to 10 years of continuous service at March 31, 2005:

      An employee who has reached 3 to 10 years of continuous service as at March 31, 2005 receives long service gratuity at the rate of one week of salary for each nine months of continuous service, to a maximum of 13 weeks of salary. Entitlement is frozen as at March 31, 2005 and the amount is paid when the employee retires from active service. Upon retirement, the long service gratuity is calculated at the salary rate as at March 31, 2005.

    2. An employee with 10 or more years of continuous service at March 31, 2005:

      An employee who has reached 10 or more years of continuous service as at March 31, 2005 is entitled to continue to accumulate service towards long service gratuity purposes as follows: three calendar months of salary for the completion of ten years of continuous service, and for each subsequent year of continuous service an additional one-fifth of one month of salary, provided that in no case shall the total maximum exceed six months of salary. Upon retirement from active service, the long service gratuity is calculated at the salary rate as at March 31, 2005.

  5. An employee may be entitled to severance or long service gratuity, not both.
  6. For the purposes of calculating a long service gratuity entitlement, severance paid as a result of termination of employment (e.g., layoff, restructuring, etc.) constitutes a break in service even if re-employed.

    Note: Certain types of absences and part-time work may impact long service gratuity calculations.

  7. An employee eligible for long service gratuity upon retiring from the Corporation is entitled to elect a period of Retirement Leave in lieu of the lump sum payment equivalent, or a combination of Retirement Leave and a lump sum payment. (See Directive on Retirement Leave.)
  8. An employee is entitled to allocate the long service gratuity, up to a maximum of $25,000, towards the cost of Retiree Supplementary Health Care Plan premiums under the Premium Continuance Program. (The Shared Services Centre will provide information at time of retirement.)
  9. An employee who resigns or who is terminated for cause, irrespective of whether he/she elects an immediate pension, is not eligible for the long service gratuity, severance or other pay in lieu of reasonable notice.

SUBSIDIARY POLICY INSTRUMENTS

INQUIRIES

All questions pertaining to the application of this Directive should be referred to the Shared Services Centre.

APPENDICES

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