I was included in a restructuring activity within my employer and was dismissed. As part of my dismissal I was requested to work for an 11 week notice period to complete a key project. I completed the project and worked long hours and weekends to ensure it's success. Part of my package included a severance payment which I directed my employer to transfer directly into my personal RRSP account. My employer notified me that due to an RSU award in January of this year practically all of my severance payment would be withheld in tax and charged at the federal tax rate. The final payment into my RRSP account will be approx 3% of my severance payment. Is my employer entitled to withhold this amount of tax from my severance payment despite my direction to transfer this amount to my RRSP account? Also, for the final 4 months of my employment my net take-home pay was practically zero due to how my employer treated my RSU tax exposure.