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| Inna Koldorf |
Ontario statutory severance based on global payroll
Section 64(1) of the Employment Standards Act (ESA) entitles a terminated employee who was employed for five years or more to statutory severance pay if the employer’s annual payroll is $2.5 million or more.
Until recently, the Ontario Labour Relations Board (OLRB) has taken the view that the $2.5-million payroll threshold for the entitlement to statutory severance pay was limited to an employer’s payroll in Ontario. However, in Hawkes v. Max Aicher (North America) Ltd [2021] O.J. No. 3284, the Divisional Court found that it is the employer’s global payroll, rather than the payroll in Ontario, which must be considered for the purpose of statutory severance pay calculation, overturning the OLRB’s decision in this matter.
The court noted that the ESA does not contain an express restriction of the payroll to Ontario, and would have contained such restriction if that was the intention. In addition, the court noted that given that the purpose of the ESA is to extend protection to employees, an interpretation which extends statutory severance pay to more employees is preferable. Requiring employers to consider their global payroll for statutory severance pay purposes would better meet this purpose, further supporting the court’s findings.
Sorry seems to be the hardest word
In Hucsko v. A.O. Smith Enterprises Ltd. [2021] O.J. No. 6307, the Ontario Court of Appeal reviewed the Superior Court of Justice’s 20-month damages award to the plaintiff who, the Superior Court determined, was terminated unjustifiably.
In this case, another employee alleged sexual harassment by the plaintiff. An investigation substantiated the allegations. The employer advised the plaintiff that he would be required to participate in sensitivity training and apologize to the complainant. The plaintiff disagreed with the findings and refused to apologize. The employer immediately terminated the plaintiff’s employment for just cause, asserting that the plaintiff’s conduct was inconsistent with the employer’s policies, that the plaintiff showed no remorse and was therefore unwilling to correct his behaviour, and that the plaintiff’s refusal to apologize constituted willful insubordination which could not be condoned by the employer. The plaintiff filed a claim for wrongful dismissal.
At trial, the Superior Court of Justice found that the employer failed to demonstrate just cause. The Court of Appeal set aside the trial judge’s decision and found that the plaintiff’s conduct gave the employer just cause for termination. The appropriate analysis for the determination of just cause, the court noted, was to determine the nature and extent of the misconduct, consider the surrounding circumstances, and decide whether dismissal was warranted and proportional. The plaintiff’s sexual harassment of the complainant was the misconduct relied on by the employer for its just cause position. The surrounding circumstances included the plaintiff’s 20-year seniority with the employer, and the fact that he was recently trained on the employer’s workplace harassment policy. Given these surrounding circumstances, and the plaintiff’s refusal to acknowledge wrongdoing and apologize as part of the corrective action required by the employer, the plaintiff’s conduct led to the breakdown of the employment relationship. As a result, dismissal for cause was justified.
This is the second part of a two-part series. Part one: Significant 2021 Ontario employment law decisions.
Inna Koldorf is a partner in Miller Thomson LLP’s labour and employment law group, where she advises employers on labour, employment and human rights issues.
Photo credit / Nuthawut Somsuk ISTOCKPHOTO.COM
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