Voluntary Separation Package: What you need to know

If you’re a permanent City employee, you should have heard by now about the city extending a voluntary opportunity to apply for a separation program.

The Voluntary Separation Program offers up to a maximum of 26 weeks salary as a lump sum payment, based upon your continuous years of service (pro-rated for part-time service), at a rate of three weeks per year of service.

CUPE Local 79 urges members to think carefully before applying for this Voluntary Separation Program.

Mayor Ford is using lay-off threats to frighten you into applying for the program; he wants you to accept the package in order to reach his goal of cutting city services.  Local 79 President, Ann Dembinski, has gone on the record to say: “Every time a worker leaves a City job, it’s guaranteed that public services will be affected.”

“The Mayor should be trying to find a way to protect the services that the people of this City have said they want – not shrinking the workforce to the point where these much-needed services can no longer be provided.

CUPE Local 79 does not think the Voluntary Separation Program compensation is a great deal. But nevertheless, be sure to weigh the Separation Program package against your options. 

If you are a long-term employee, the Separation Program becomes an even poorer deal. The compensation you would already receive under the Employment Standards Act in the event of a lay-off would be about the same.  Long-term employees also have seniority rights in the event of lay-offs.  If you were already planning on retiring in the next year, though – the Voluntary Separation Program becomes more attractive.

Voluntary Separation Program – Employee Information Sessions

Employee Information Sessions on the Voluntary Separation Program will be held at various locations on July 26, 27, 28 and August 9, 10 and 11. Toronto Public Service permanent employees eligible for this program are welcome to attend.

Twenty one employee information sessions will take place in the Council Chamber at each of the following locations (registration not required):

• Tuesday, July 26: 8-10 a.m., noon-2 p.m. and 3-5 p.m. – Scarborough Civic Centre
• Wednesday, July 27: 8-10 a.m., noon-2 p.m. and 3-5 p.m. – Etobicoke Civic Centre
• Thursday, July 28: 8-10 a.m., noon-2 p.m. and 3-5 p.m. – Toronto City Hall
• Tuesday, August 9: 8-10 a.m., noon-2 p.m. and 3-5 p.m. – North York Civic CentreWednesday, August 10: 8-10 a.m., noon-2 p.m. and 3-5 p.m. – Etobicoke Civic Centre
• Thursday, August 11: 8-10 a.m., noon-2 p.m. and 3-5 p.m. – North York Civic Centre
• Thursday, August 11: 8-10 a.m., noon-2 p.m. and 3-5 p.m. – East York Civic Centre

CUPE Local 79 and the City are providing several Question and Answers about the Voluntary Package that you may find useful:

Q1: Who is eligible?

A1: All permanent employees, except firefighters, in the Toronto Public Service are eligible to voluntarily apply.

Q2: Are there any Toronto Public Service permanent employees not eligible to voluntarily apply to the separation program?

A2: Yes, any permanent employee who has already submitted their resignation or intent to retire as of the separation program announcement date of July 12, 2011, is not eligible for this program even if such employee rescinded their resignation/notice of retirement and subsequently applied to this separation program.

Q3: What is the voluntary separation program incentive?

A3: An employee may be eligible to receive up to six (6) months’ of their base job’s salary depending upon his/her completed continuous years of service, pro-rated for part-time service, with the Toronto Public Service.

Q4: What is the service formula for the voluntary separation program?

A4: Bargaining unit members and exempt staff receive 3 weeks’ salary for each full year of continuous service.

Q5: Which salary is used to calculate my settlement if I am acting in a higher-rated position?

A5: The settlement is normally calculated using the base job salary. If you have been acting continuously in a higher-rated position for two or more consecutive years, your acting salary will be used to calculate your settlement.

Q6: What is continuous service?

A6: Continuous service is the service that the City recognizes to determine an employee’s eligibility for benefits, vacation entitlement, salary calculation (100 or 75%) while on short-term disability or income protection plan. Part-time service is pro-rated.

The following service is excluded:

• previous service that was lost (i.e. not recognized) when an employee was rehired by the City (e.g. previously resigned or terminated from the City, rehired following recall expiry)
• absences that break service (refer to collective agreement and/or policy e.g. periods of layoff, non-legislated approved leaves of absence without pay, un-protected periods of illness or non-work related injury). Exception: full long-term disability absences are included

Q7: I am a non-union employee; am I exempt or management?

A7. Exempt employees are in non-union pay grade jobs rated at 5.5 or below and

• in administrative or clerical position with the word “assistant” or “clerk” in the job title, e.g. Executive Assistant, Administrative Assistant 2, Budget Clerk, with the exception of Assistant Engineer jobs, OR
• in one of the following job classifications: Access and Privacy Intake Analyst, Budget Coordination Officer, Computer Programmer Clerks, Control Room Officer, Ombudsman Representative, Paralegal Employment Law, Security Officer, Web Editor.

All other non-union employees are considered management.

Q8: I’m a permanent employee participating in the permanent part-time program. How is my separation payment calculated?

A8: As your part-time service is pro-rated when determining continuous service, the normal full-time salary of your position will be used in calculating your separation payment.

Q9: Can I receive my separation payment in the form of salary continuation?

A9: A bridging option is available only to employees who can use their voluntary separation upon departure to continue their salary until they are eligible to retire with retiree benefits (see next question). Under this option the separation payment is paid as salary continuation to bridge to age 55. Any remaining money will be in a lump sum upon retirement.

Q10: Who is eligible for retiree benefits? A10: The following employees are eligible for retiree benefits under this program:

Retiree benefits: 

• Continued coverage of health, dental and group life insurance to age 65 (or grandparented retiree benefits if eligible. Non-union employees must have previously elected grandparented retiree benefits).
• After age 65, $5000 paid up group life insurance policy

Q11: Who is eligible for the transition allowance?

A11: Employees who are ineligible to retire on an immediate pension with retiree benefits on their departure date, or to use their separation payment to bridge to age 55, will receive a benefit/transition allowance to assist with health and dental expenses/premiums and/or skills upgrading.

Transition Allowance

Q12: How do I apply? A12: Employees must voluntarily apply, in writing, by completing the required

Application Form. The application form is available at: http://insideto.toronto.ca/hrweb/index.htm (this link will only work within  the City’s intranet), or a paper application form may be picked up at the Security Desk at any of the City’s Civic Centres.

Q13: What is the deadline for applying?

A13: The City must receive the application by 5:00 p.m. on Friday, September 9, 2011.

Q14: Where do I send my completed application form?

A14: Submit your confidential application to:

Workforce Transition Team
Human Resources Division
Metro Hall, 4th Floor
55 John Street
Toronto, ON M5V 3C6

Applications may be placed in the confidential drop-off box to the right of the reception desk on the 4th Floor, Metro Hall during normal business hours.

Q 15: If I apply, do I automatically receive the separation package?

A 15: No, all applications will be reviewed by a central senior management committee, in consultation with Human Resources, Finance and the City Divisions, and only those approved will receive the separation package. Decisions will be based on operational needs.

For every employee approved under the voluntary separation program a permanent position must be deleted from the organization.

Q 16: When will I know if my application has been approved or not?

October 2011.

Q17: How will I receive notification of VSP application approval or non approval?

A17: All applicants will receive a written response and those approved will be provided with the effective date of their resignation/retirement.

Q18: What is the expected resignation/retirement date if an employee was approved for a separation package?

A18: It is anticipated that employees will begin departing in October 2011 and no later than December 31, 2011. (On an exception basis, some departures may be deferred until early 2012)

Q19: Why the variation of the departure date?

A19: Each division and employee may have specific work priorities or work completion issues that may necessitate a different departure date.

Q20: What happens if I apply but I then change my mind?

A20: An employee will have up to no later than Friday, September 30, 2011 to withdraw, in writing, his/her application. After this date, an employee, who has not rescinded his/her application and whose application has been approved, is committed to irrevocably resign/retire from the City of Toronto – Toronto Public Service on the date provided in the approval notification letter.

Q21: How will my payments be taxed?

A21: Lump sum payment – The withholding tax is based on lump-sum payments (separation payment, transition allowance if eligible, and sick pay gratuity, if applicable) and is taxed at 30% if your total payments are greater than $15,000. However, the overall amount of tax that you pay in any given year depends on your total annual income. You may defer payments until the next calendar year or you may be able to tax shelter part of your payments by transferring to an RRSP or RPP.

Salary continuation – Taxes withheld are calculated at the normal rate, like a regular pay cheque. You will make contributions to EI and CPP, if applicable. You will be required to pay any required pension contribution and/or benefit premiums while on salary continuation.

Q22: Can I tax shelter any of my payments?

A22: You may be able to tax shelter a portion of your lump-sum payments by transferring money to a registered retirement savings plan or registered pension plan based on the following:

• Unused contribution room in your RRSP. Your latest Notice of Assessment provides information on RRSP contribution room. A copy of your Notice of Assessment is required to transfer money.
• Eligible portion of your lump sum payments. The basic formula allows you to shelter $2,000 for each calendar year or portion of a year of service before 1996 that you were employed by your predecessor municipality (i.e. former Metro, North York, etc.) You can add $1,500 for each of those years before 1989 that you did not belong to the pension plan (e.g. OMERS). Your Human Resources representative will advise you of your eligible portion if your application is approved.

You may want to consult with an independent financial advisor to help you determine your tax sheltering and deferral options.

Q23: How do I transfer my lump-sum payments to a bank or other financial institution?

A23: Complete the Tax Waiver form included with the paperwork that you will receive following your application approval and return it to your Human Resources representative. Any amount not transferred to an RRSP will be taxed at source.

Q24: What can I do with my pension if I do not plan to retire now?

A24: There are a number of options:

• You can transfer the contributions and service to another employer if that employer has a reciprocal agreement with your current pension plan
• You can leave your entitlement with the plan and retain your right to normal or early retirement
• If you are not within 10 years of normal retirement age you can forfeit your rights to a future pension and transfer the “commuted value” to a locked-in RRSP 

Pension arrangements are very complex. After you receive your options document from OMERS providing you with the various pension options and dollar amounts applicable to each option, you should consult an independent financial advisor.

Q25: Who do I contact for pension estimate?

A25: Employees requiring pension estimates are strongly encouraged to login to myOMERS and take advantage of the Retirement Income Estimator which is located on the OMERS website (www.omers.com). The Retirement Income Estimator can provide instant and unlimited pension estimates with no additional data entry required as the Estimator uses personal data from the OMERS database. There is also the option to add in other government pension plans (CPP and OAS) and the Estimator can provide after tax income comparison as each estimate provides a snapshot of your estimated net income before retirement and your estimated net income after your retirement.

Or, you may contact OMERS, Client Service at 416-369-2444 or by e-mail at client@omers.com, or you may contact the Benefit Representative listed in Appendix A.

Q26: What happens with my vacation or any other monies owing?

A26: Outstanding payments such as vacation float days and unused lieu time are paid out upon separation.

Locals 79 and 416 employees who retire with an immediate pension may receive their sick pay gratuity, if eligible, in the form of salary continuation in order to contribute to the pension plan prior to retirement. Non-union employees of the former Metro, Toronto and Etobicoke who are retiring may use their sick pay gratuity to extend time on payroll prior to retirement as per approved predecessor municipality policies.

Q27: Can I be re-employed by the city if I leave under the voluntary separation program?

A27: You cannot be re-employed by, or do contract work for, the City of Toronto or any of its special purpose bodies for a period of two years. The intent of the separation program is to permanently reduce the size of of the City’s workforce.

Q28: How do I find out more information about the separation program?

A28: If you have further questions please e-mail them to the following email address: voluntary@toronto.ca and your questions will be promptly responded to.

Information sessions will be held at the end of July and early August. Details to follow.

Q29: I am considering applying for the voluntary separation program and I have pension and benefits questions, who do I contact?

A29: Please contact the representative for your division:

Q30: As a non-union employee, will I also receive the special cost of living provisions of the 2009 – 2011 Retirement Program for Non-Union Staff?

A30: No. Participation in the 2009 – 2011 retirement program cannot be combined with participation in other separation programs.

Q31: I will turn 55 in February. Can I use my separation payment to bridge to early retirement? If yes, can I then receive my sick pay gratuity as salary continuation?

A31: Yes your separation payment will be used to bridge you until the end of February when you can retire. Any remaining money will be paid in a lump sum upon retirement.

The option to use SPG as salary continuation is available to Locals 79 Full-time and 416 employees. It is also available to non-union employees from the following predecessor municipalities: Metro, Toronto and Etobicoke. In addition, you must be eligible to retire with a pension (i.e. minimum age 55) to choose salary continuation using your SPG. If your VSP application is approved, you will receive your separation package, including an Election of Payment Options form where you will indicate how you want your SPG paid.

Q32: I’ll be 55 in the fall of 2012. If my separation payment, outstanding vacation days and sick pay gratuity were paid as salary continuation I will be able to retire. Can I receive these payments as salary continuance?

A32: No. Salary continuation using your separation payment is available only if the payment will bridge you to your 55th birthday. Outstanding payments such as vacation are paid out upon separation. To choose salary continuation of your SPG, this option must be available to you and must be eligible to retire with a pension (see question above).

 Q 34: I work shifts as part of my regular hours of work want to take the Voluntary Separation Package: Since shift bonus is a regular part of my pay cheque, will my Voluntary Separation Package include shift bonus?

 A 34: The City’s reply is no. The Voluntary Separation Package is based on base salary only. It does not include any shift bonus that a member would normally be entitled to.