Severance Pay Case Studies – Part 1

 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.         An eight-year employee notifies his employer, on February 15, 2010, that he will
            resign on April 15, 2010. On March 1, 2010, the employer terminates the
            employee effective immediately.
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. Since the employee intended to resign and thus caused the job loss.
Q3.      Is the employee entitled to termination pay?
A3.      Yes. The employee would be entitled to six weeks of pay for being terminated
            prior to the effective date of his resignation. 
2.         Employee has 10 years and 6 ¾ months of employment. Regular non-overtime
            weekly wage is $500.00.
Q.        How much severance pay should this employee receive?
A.        Since the severance pay is calculated on the completed years and months of
            service, the part of the month he has not completed does not count, he is entitled
            10.5 weeks of pay, which, amounts to $5,250.00?
3.         On January 2, 2010, the employer issued a written notice of termination to the
            employee that he would be terminated effective March 1, 2010. However, on
            February 25, the employer informed the employee that he could work an extra
            week after March 1, 2010, the employee refused. On February 26, the employer
            advised the employee that he would not be terminated. The employee worked for
            the employer for 15 years.
Q1.      Can the employer withdraw notice of termination unilaterally?
A1.      No. The employer cannot withdraw notice of termination without the consent of
Q2.      Is the employer liable for severance pay?
A2.      Yes. The employee would be entitled to severance pay of 15 weeks.
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 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

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

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