Michael Applebaum was handed $267,923.90 as a result of his years spent in municipal government.
Applebaum had been a borough mayor, executive-body chairman, and finally interim mayor for seven months until this spring.
His brief mayoral stint ended with an emotional resignation, after police arrested him on corruption charges in a kickbacks-for-land investigation in his borough.
Applebaum said he would fight to prove his innocence after he was arrested last month, but he said he would step down in the meantime.
City officials say Applebaum was entitled to the severance pay under provincial law — and that no rules exist that would have allowed authorities to withhold it.
"Nothing allows the refusal of payment of departure and transitional allowance to Mr. Applebaum," said an email from city hall.
"Neither the reason given for his departure nor the charges against him have an effect on his rights under the pension plan for elected municipal officials.
"So in making these payments to Mr. Applebaum, the City of Montreal is respecting and applying the provisions of the (provincial) law on the treatment of municipal elected officials."
The payment includes $108,204.90 in departure pay, as well as $159,719.00 in a "transitional allocation."
Applebaum, as a result of his brief interim stint at city hall, holds the distinction of having been Montreal's first anglophone mayor in 100 years.
He now faces 14 charges including fraud, conspiracy, breach of trust, and corruption in municipal affairs.
The main opposition party at city hall says the severance rules need to change.
Vision Montreal's Louise Harel intends to bring a motion to the next municipal council meeting on Aug. 26, requesting that the rules be altered so that severance packages can be withheld if an elected official's departure is deemed invalid.
"(Applebaum) can keep this sum even if he's found guilty of the criminal charges against him," Harel said in a statement.
"This kind of thing deepens public cynicism and needs to be corrected."
She said similar changes are being considered at the provincial level under a bill before the legislature, and urged that the principle be extended to municipal politics.
-With files by Alexander Panetta