Ontario Labour Relations Board Provides Further Clarity on Severance Pay Obligations

Pursuant to Section 64 of the Ontario Employment Standards Act, 2000 (“ESA”), Ontario employers must provide an employee who has been terminated without cause, with “severance pay” where the employee has five or more years of service and the employer has a payroll of at least $2.5 million. However, in the recent decision in Doug Hawkes v. Max Aicher, the Ontario Labour Relations Board considered the issue of whether an employer’s global payroll should be considered in determining an employee’s entitlement to severance pay under ESA. The Applicant had argued that taking into account the 2014 Ontario Superior Court decision in, Paquette v. Quadraspec Inc., an employer’s national payroll, as opposed to exclusively its Ontario payroll, must be considered when determining whether the employer had met the $2.5 million threshold. The Labour Board distinguished the Paquette case based on the facts, and confirmed that an Ontario employer will not be liable for statutory severance payments if the company’s Ontario payroll is less than $2.5 million, even if the company has a global payroll in excess of $2.5 million.

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