December 6, 2021

Volume XI, Number 340


December 03, 2021

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Global Payroll Now Applies to Severance Pay Calculations in Ontario

The world is shrinking, and the cost to multinational employers may have grown because of it.

In Hawkes v. Max Aicher (North America) Ltd., 2021 ONSC 4290 ("Hawkes"), Mr. Hawkes was originally denied severance pay because the Ontario Labour Relations Board ("OLRB") found that his former employer, Max Aicher, had a payroll of just under $2.5 million in Ontario.

This OLRB's finding effectively ended Mr. Hawkes' entitlement to severance because, under the Employments Standard Act2000 ("ESA"), severance pay is only payable if (a) the employee has been employed with the employer for more than five years, and (b) the employer has payroll obligations in excess of $2.5 million per year.

On appeal before the Divisional Court, Mr. Hawkes argued that the OLRB had made an error of law by only looking at payroll in Ontario. Instead, he reasoned that when considering whether an employer has a payroll of over $2.5 million per year, the ESA requires a global assessment of the employer's payroll. The Court agreed, finding that given the purpose of the ESA, the ambiguity in the legislation had to be resolved in the favor of Mr. Hawkes.  

Going forward, this decision will impact any employer with operations outside of Ontario because they will have to assess their entire global payroll in considering whether severance is payable to an employee under the ESA. In fact, employers may have to go a step further and consider subsidiary companies in their payroll calculations, as was the case in this decision.

© 2021 Miller, Canfield, Paddock and Stone PLC National Law Review, Volume XI, Number 288

About this Author

Jeffrey Patterson Employment Attorney Miller Canfield

Jeffrey Patterson is a labour and employment lawyer at Miller Canfield’s Windsor office. He advises public and private sector clients on a wide range of labour and employment issues including labour disputes, grievance arbitrations, collective bargaining, interest arbitrations, wrongful dismissals, employment standards, workplace safety and insurance, employment contracts, human rights and accommodation and related court litigation.

In his labour and employment practice, Jeffrey has represented clients and appeared before the Human Rights...