Employees who are fired have long been entitled to various protections under Ontario’s Employment Standards Act, 2000. One of those protections – statutory severance pay – got a jolt in the arm last week with Hawkes v Max Aicher (North America) Ltd. in a way that will ensure protection for more employees than previously believed, including employees of smaller organizations that are affiliated with or subsidiaries of other companies outside of Ontario.

Statutory severance pay entitles eligible employees with 5+ years of service with their employer to severance pay, but only if their employer’s annual payroll is $2.5 million or more. How that payroll was to be calculated, however, was the subject of dispute in Hawkes v Max Aicher (North America) Ltd. There was never a doubt that the payroll for all employees based in Ontario would count. But what if your employer’s operations are mostly in Quebec or Alberta – or Europe or Asia, for that matter? Should the salaries of those employees count? Many employers have tried to exclude those employees, arguing that only the salaries of employees in Ontario should count.

Fortunately, Ontario’s Divisional Court may have put the matter to rest this week. In a unanimous decision by the 3-judge panel in Hawkes v Max Aicher (North America) Ltd., the appellate court rules that all employees – whether they are based in Ontario or not – should count towards the $2.5 million threshold.

The impact of this cannot be overstated; it will suddenly and dramatically raise the floor for many employees of small subsidiaries/affiliates with larger operations outside of Ontario. On the employer side, many will now need to reconsider their obligations when firing employees.

It is also important to note that while this change increases the minimum amounts that many employers will have to pay, it will typically not change the maximums. Most employees are entitled to more than the amounts in the Employment Standards Act, 2000. Employees who have been fired should seek legal advice before signing severance offers, especially ones that only include the minimums.

We at Whitten & Lublin are happy to provide insight and advice into your specific circumstances. If you are looking for employment lawyers and would like more information about what Whitten & Lublin can do for you, please contact us online or by phone at (416) 640-2667 today.

Author: Stephen Wolpert