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Tanchat
Dear experts,

I don't understand what is difference between (D) and (E).
Meaning between (D) and (E) may be a little bit different but I don't know why meaning of (E) is wrong.

"The day/time THAT something happened" is a construction you'll often hear English speakers say—e.g., you'll commonly hear couples reminiscing about "the day that we met"—but it's not a valid formal written idiom.

The correct idioms for this type of meaning are inverted forms of modifiers that also work the other way around.
E.g.,
We met during this time period <—> ...the time period during which we met
We met in 1978 <—> 1978 was the year in which we met
...and of course you can also write the year/time/period WHEN we met.


"That", on the other hand, isn't workable unless it actually makes sense in its ordinary capacity, following the object of some verb.
e.g., you CAN write The earliest specific day that I remember from my childhood..., because you actually remember that day from your childhood.

This is why choice E doesn't work.
You can't write the last day that they are scheduled to collect unless they were actually "scheduled to collect a day", which makes no sense at all.
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Sadly, the usage of the day that something happened does not seem limited to colloquial speech.

Examples from the NY Times:
the day that Elizabeth II became Britain's longest reigning monarch
the day that Congress was to meet
the day that Mr. Ruto addressed a crowd of supporters
the day that Hong Kong was returned to China
the day that the ad appears
the day that his club closed


Examples from The Atlantic:
the day that my entire right arm went numb
the day that Americans decide they need to lose a few pounds
the day that Esparza-Casarez's husband died
the day that France takes possession of New Orleans


Examples from The Economist:
the day that everyone is connected to 5G
the day that Congress would be counting
the day that the Senate rejected four gun-control measures
the day that Jamaica announced its plans
the day that the Senate approved the gun-control reform package
the day that America remembers its fallen soldiers,
the day that he would leave


From Harvard University:
the day that the IOP was launched
the day that Abel Rodriguez won his first asylum case
the day that libraries and universities will save money
the day that new students enrolled at the school


I agree that this idiom is problematic.
I would be highly skeptical of an answer choice that includes it.
That said, many respected publications seem to consider it acceptable.
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Tanchat
Dear experts,

I don't understand what is difference between (D) and (E).
Meaning between (D) and (E) may be a little bit different but I don't know why meaning of (E) is wrong.

Hello Tanchat,

We hope this finds you well.

To answer your query, Option E alters the meaning of the sentence through the phrase "the last day they are scheduled to collect"; the construction of this phrase incorrectly implies that most severance packages require workers to stay until the last day that they are scheduled for the specific purpose of collecting their severance package; the intended meaning is that most severance packages require workers to stay until the last day they are scheduled to work in order to collect their severance package; Option D correctly conveys this meaning through the phrase "their last scheduled day in order to collect".

We hope this helps.
All the best!
Experts' Global Team
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