The original term describes what happened when a vessel returned to port and the crew, whose wages had been withheld, were finally paid after their work was complete.
In the modern navy, it's a final ceremony to acknowledge the ship's service and decommission her.
"It means the ship will no longer be a naval ship," Mac MacKay, a longtime Halifax Harbour watcher, told CBC's Information Morning. "It will just be a big lump of steel that has no particularly use to the navy."
The federal government announced last year that the Iroquois and three other Cold War-era ships would be retired.
The Iroquois was commissioned in 1972 and has served as one of Canada's most important warships.
On Friday morning, former crew members will have a chance to take one last tour of the ship.
An 86-metre pennant will be unrolled, passed through the hands of the Iroquois crew and down to the jetty to former sailors who served on the destroyer.
There will be a Sea King flyover and the ship will be given three cheers. Finally, the naval ensign and naval jack will be lowered.