Severance Pay Case Studies – Part 2

What is the Employment Standards Act?
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.
Does the Act cover all employees in Ontario?
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.
What is Severance Pay?
Severance Pay is money paid by an employer to some workers who lose their jobs. It is paid in recognition of their years of service.
Can I get Severance Pay?
You can get severance pay only if:
.           You have workedfive or more years for your employer
.           Your employer is in one of the following two groups:
            (1)        Your employer has a payroll in Ontario of at least $2.5 million a year; or
            (2)        Your employer is no longer going to be carrying on all or part of the
                        business and 50 or more workers will lose their jobs for this reason inside
                        a six month period.
1.         Two employees were employed as steel fitters with a steel company. Employee A        
had been employed with the company since May 1990 while Employee B since October 1995.
Both employees lived in Toronto. Since starting their employment with the employer, they worked at a plant located at Erindale Station Road in Mississauga.
In 2005, the company verbally advised all the employees of their intent to relocate the facility to Milton, Ontario.
In February 2006, a memo addressed to “all employees” confirmed that all employees will be offered jobs at the Milton facility and the move was expected to be completed by June 2006. At the same time employees were asked to sign a form if they were volunteering to move early. Both claimants refused to sign the form.
Management asked both employees if they were willing to move to Milton facility. Both declined. Employee A also stated he did not drive and had no way of going to Milton.
In October 2006, the move was completed. The only employees left at the Mississauga facility were the claimants and a maintenance crew of approximately three employees.
The claimants reported for work on October 4, 2006. They were told that work was no longer available for them at Mississauga facility. The employees never worked for the company after October 4, 2006.
Q.        Were the two employees entitled to termination and severance Pay?
A.        The officer found both employees were entitled to termination and Severance Pay.
The employer appealed the officer’s decision to Ontario Labour Relations Board. The referee confirmed the officer’s decision reasoning that the notice provided was more like information rather than a proper notice as required 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 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. The question arises, should the employee also engage the services of a professional? 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 employer’s evidence, 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

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

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