The meaning of 'Severance'

I have noticed a lot of confusion in the news recently concerning what people often (and incorrectly) refer to as "severance packages." Here is what Wikipedia has to say: "A severance package is pay and benefits an employee receives when he or she leaves employment at a company. In addition to the employee's remaining regular pay, it may include some of the following: An additional payment based on months of service. Payment for unused vacation time or sick leave." That definition might be completely accurate in whatever country it is meant to apply to. But Canadians facing termination of their employment should approach that definition with a large grain of salt. Most Canadians have no express term in their employment contracts regarding their rights on termination. With limited exceptions, these people are entitled to reasonable notice - meaning nothing more than entitlement to be informed that their job will end on some future fixed date. If they receive this, there is nothing more. What is reasonable will depend on their age, job function, and tenure - among other factors. But the above is premised on there being no express contractual entitlement. Where a binding contract is in place, that will define what the employee gets in the event of termination. This lacks the element of "payment based on months of service" as in the Wikipedia definition above. As my colleague Blair recently confirmed, there is no duty to mitigate these damages, setting them very much apart from the usual scenario. This is true unless the contract specifies otherwise. Blair's case is here, if you care to read it: http://www.canlii.org/en/bc/bcca/doc/2014/2014bcca339/2014bcca339.html I constantly see news stories about contractual payouts which the media will characterize as 'too much severance' or words to similar effect. A good example is the spate of news stories in the wake of last November's municipal elections where Councillors were paid contractual amounts when they opted to not run again for office. Of course a taxpayer is entitled to question the wisdom of entering into such a contract, but that is where the problem lies. Not with the interplay between that amount and length of service. Length of service has no more bearing on that amount than it has on salary, benefits or vacation time. When the employment contract specifies the employee's entitlement, factors such as length of service may come into the initial contractual negotiation, but they do not inform the question of payment. Pan Am CEO Saad Rafi is to receive a payment equal to one year's salary if he completes his service as CEO. This too has (unfairly) drawn criticism in the media as an overly-generous severance package. In fact, it is not a 'severance package' at all. I would refer to this as a completion bonus. The idea is not that Mr. Rafi will be compensated for being fired, but rather for staying. Here is how one article quoted his contract: "Upon completion of your full terms at chief executive officer of TO2015, but no later than the end of the employment contract period, you will be entitled to receive a termination payment from TO2015 equivalent to one year of base salary." I would suggest in the case of a CEO of a major multi-year engagement to plan such a large event Mr. Rafi is hardly overpaid. I would also say that it makes a lot of sense to me to offer a completion bonus, since seeing the whole project through is a large benefit for him to extend to his employer. The only difference between this and paying him a higher salary with no bonus is that the latter provides him with less incentive to finish his job. His employer has offered to pay for the advantages afforded by him staying until the end of his assignment. Why should this be criticized any more than any other private contractual arrangement for value provided? There are, of course, arguments about what pay and benefits people deserve for what they do. But too often I see criticism in the news for what people refer to incorrectly as 'severance' when in fact what is happening is one party honouring its contractual obligations.