TORONTO - Many Ontario municipalities are headed for bankruptcy because of golden payouts to employees who no longer work for the city, a taxpayer advocacy group said Thursday.

A study by Fair Pensions for All suggests city workers are still on the taxpayers' bill after they retire with generous pensions as well as lump sum payments for unused sick time and vacation days.

Several cities, including Hamilton, Kitchener and Guelph, are prime examples of municipalities in danger of going broke similar to the way some California cities have declared bankruptcy in recent months, said FPA president Bill Tufts.

"It's time for governments to end the practice of sick time and vacation payouts for city employees," Tufts said.

"As cities begin to suffer from the current economic crunch, they need to realize that their single biggest expense is their personnel cost. This payout policy is virtually unheard of in the private sector."

Hamilton paid out $279,454 last year to its top five employees, who stopped working for the city or retired, for unused sick time.    

Hamilton also paid out $167,100 to its top five employees for unused vacation time, the study said.

And the City of Kitchener paid out $177,387 last year to its top three employees who were no longer employed by the city in unused sick time, plus an average of $6,417 for unused vacation time.

Many governments are moving away from sick-day payouts but some employees are still on the payroll long after they've departed the civil service, said Dan Kelly, president the Canadian Federation of Independent Business.

"Cities are starting to shed that sort of thing. Provincial and federal governments are beginning to get out of those areas, which is terrific," Kelly said. "But some of them are moving from them instead of payouts to time in lieu, so they're accumulating their sick leave and then taking an extra six months off prior to their retirement. So they're out of the system so taxpayers are on the hook for that one way or another."

But Brian Lambie of the Association of Municipalities Ontario said he doesn't fear Ontario cities are bound for bankruptcy like California cities Stockton and San Bernardino.

"This study compares US cities to Canadian as though they are comparable. You have to be careful comparing apples and oranges and making conclusions," Lambie said. "They are very, very different systems."