The Ontario Employment Standards Act requires employers to pay severance pay when they have a payroll of $2.5 million or more or when they terminate 50 or more employees in a period of 6 months due to the closure of all or part of a business. Section 63(1) of the ESA provides that severance pay is owed when a a layoff lasts 35 weeks or more in a 52 week period.
The Star is reporting today that Stelco in Hamilton will be recalling some 800 steelworkers in part to avoid the 35 week marker that would trigger the requirement to pay severance, a bill in this case of around $15 million. Here is the information flyer that the Local union (Steelworkers, Local 1005) sent to its members when the layoff was announced. Severance pay is one example of the state imposing a cost on employers that restructure through down-sizing. The idea is that, in the case of large scale terminations, workers will have a more difficult time finding new work and communities will suffer. Governments pass on some of those costs to large employers, even when the companies claim that the dismissals are a necessary cost-cutting response to economics.
What do you think about this policy of forcing large-size employers to pay severance pay (on top of ‘notice of termination’)?
Stelco to Recall 800 Workers, or Face Big Severance Pay Bill
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