Child Support Guidelines: Will Severance Pay Impact Your Child Support Obligation?  

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  Katrina Wiegers
  Lawyer

Last week we discussed the effect of income over $150,000 on the table amount of the Child Support Guidelines. The conclusion (read here) was that in certain rare circumstances, Courts will deviate from the table amount if the amount outweighs the needs of the child in their particular circumstance. This week we will look at another example where the high income (over $150,000) was a temporary change or brief windfall. The scenario in this blog titled, Child Support Guidelines: Will Severance Pay Impact Your Child Support obligation?,  the increase was due to a severance package.  

Is Severance Included in Income?  

When a parent experiences a job loss and receives severance pay, it can significantly impact their child support obligations. Under the Child Support Guidelines, severance pay is explicitly included in the definition of income, meaning it must be considered in determining the financial responsibilities of the payor. This ensures that all forms of income replacement, including severance, are taken into account when calculating child support, accurately reflecting the payor’s true economic capacity during the period they receive such payments. 

Reasonableness Reigns Supreme 

A case that sheds light on this issue is Tillmanns v. Tillmanns (2014), where the Ontario Superior Court emphasized that its focus is not on the full range of options available to the payor but on the reasonableness of their actions following a job loss. The court considers several factors when determining whether the payor made reasonable efforts to secure new employment, including the individual’s experience, qualifications, the state of the job market, and the actions they took to find a new job. 

If the payor is immediately able to obtain new employment – will they have to pay based on their new income combined with their severance?  

Severance Can be Excluded 

In O. (S.J.) v. W. (S.J.) (2008), the Court had to determine whether severance pay should be included in the father’s income for child support purposes. The father, who lost his job due to a corporate takeover, received a severance package of $62,500 in 2006, in addition to his salary and other income sources. The court concluded that the father’s severance should be excluded from the child support calculation, citing the unique circumstances of the case. 

Again, the Court emphasized the need to consider the financial needs and circumstances of both parents and the children when determining child support. This included the fact that both parents had equivalent incomes, the children were older, and the father’s employment situation had changed significantly. As a result, the court adjusted the father’s income for child support to reflect a more reasonable amount, excluding the severance and one-time payments. 

An Exception, Not the Rule 

Therefore, it’s important to note that the Court in O. (S.J.) v. W. (S.J.) stated that it should not be seen as a general rule for all cases involving severance. Each case is unique, and the court’s determination of income will always depend on the specific facts and context, including the payor’s efforts to secure new employment and the needs of the children involved. 

If you are dealing with child support and severance pay, it’s crucial to seek legal advice to understand how the guidelines apply to your situation. The family law lawyers at McKenzie Lake Lawyers are here to help. 

If you require assistance with any Family Law matter, speak to a Family Lawyer at McKenzie Lake Lawyers LLP by calling (519) 672-5666.