Determining Severance Requirements

The Employment Standards Act is the law that contains basic rules about employing people and working. Both employees and employers have rights and

responsibilities under the Act.

 

Most employees are covered by the provincial legislation. However, employees working in industries that fall under Federal jurisdiction, such as, Post office, Banks, Railways, Radio stations, Airlines, Television stations etc. are not covered. 

 

If you are member of the trade union and your contract of employment is governed by the collective agreement, you may not be covered by the Act.

If you are currently employed with the company, you may be able to file a claim with a request that your name not be disclosed. The Act protects you when you are exercising your rights under it.

Q1.      Who is eligible for Severance Pay?

A1.      An employee must have been terminated;

An employee who has been employed by the employer for five or more years.

          

Q2.      Who is liable for Severance Pay?

 

A2.      An employer with a payroll of at least $2.5 million who terminates one or more

           Employees;

           OR

           An employer who terminates fifty or more employees in a six-month period

           because there has been a permanent discontinuance of all or part of the

           employer’s business.

 

The employee who resigns is usually not entitled to severance pay, with two exceptions

 

.           Where the employee’s resignation constitute constructive dismissal.

.           The employer first gave the employee notice of termination and the employee

           subsequently gave at least two weeks written notice of resignation to the employer

            the last day of which must fall within the statutory notice period.

 

The “statutory notice period” means

 

.           The notice period the employer must give under the Act.

.           the equivalent time period to that required under the Act when the employer

            provides a greater amount of notice than required; (ends with the terminate date)

 

An employee who gives notice of termination but is terminated by the employer prior to the resignation date, is not entitled to severance pay.

 

Q1.      Who is responsible for ending the employment relationship?

A1.      The employer is responsible for ending the employment relationship.

 

Q2.      Is the employee entitled to severance pay?

 

A2.      No. Because the employee intended to end the employment relationship.

 

Q3.      Is the employee entitled to termination pay?

 

A3.      Yes. The employee is entitled to six weeks of termination pay because the

            employee was terminated 6 weeks before his notice was to expire.

 

Sometime the issue arises about the length of employment. In this regard, the employment includes time spent:

 

.           in active employment; and

.           on lay off, leave of absence or vacation

 

as long as the employment relationship still exists. The length of notice period is also included in determining the length of employment, for example; an employee with 4 years and 11 months service would be entitled to severance pay if terminated because he is entitled to four weeks of notice under the Act.

 

If you or the employer disagrees with the investigating officer’s decision, both parties have a right to appeal to Ontario Labour Relations Board within 30 days of the officer’s decision. The Board appoints a referee to hear the appeal. It does not cost the employee to request an appeal but the employer may be required to deposit monies in trust with the Ministry of Labour if it is found to be owing. The monies are distributed according to the decision of the referee. The referee decision is final and binding on both parties.    

 

In the past, the Ministry was very aggressive in defending the rights of an employee and would send a legal counsel to represent the employee at the Board’s hearing to deal with the matter. It rarely does so now. Obviously, the employer has advantage over the employee in these circumstances as it has more resources than the employee. The question arises, should the employee also engage the services of a professional to deal with these matters. It is my view, employee’s may not engage such services at the officer’s level hearing but may do so at the referee level hearing, particularly, if the issues are complex.

 

It is important that if a hearing has been scheduled, the employee must attend such a hearing to present evidence to support its position or to contest the evidence of the employer, otherwise, the officer or the referee may rely on the evidence of the employer to render a decision.   

 

This information is provided for guidance only and should not be considered as a legal advice.

This article is provided by Rajinder K. Batra, who is a retired Employment Standards Officer with the Ministry of Labour with 15 years experience in these matters.

If you have any questions regarding your employment, please contact the writer by e-mail at esaconsulting@hotmail.com

If you don’t have access to e-mail; you can fax your question at (905) 331-1805.