Canadian Employment Law Today

CANADIAN EMPLOYMENT LAW TODAY CASE IN POINT: EMPLOYMENT STANDARDS Severance pay kicks in with expiry of layoff Continued from page 4 layoff notices which are deemed to be notices of termination and, in turn, lead to employee elections." Employment termination is not the only issue that arises during layoff. One must also be mindful of employment severance as a result of layoff. In a unionized workplace, employment termination and employment severance may not occur simultaneously. The ESA provides that severance occurs once layoff lasts longer than 35 weeks in a period of 52 consecutive weeks or the layoff is the result of permanent discontinuance of all of the employer's business at an establishment. Unionized employee can waive right to recall Where a collective agreement contains a temporary layoff period provision and severance occurs before the end of that period, the employee is entitled to elect to immediately receive her severance pay or maintain her right to recall. An employee who elects to receive severance pay is "deemed to have abandoned the right to be recalled," triggering entitlement to notice of termination or payment in lieu of notice. If the employee elects to maintain her right to recall, the severance pay is held in trust until she either accepts a recall offer or the recall right expires, resulting in the termination and entitlement to severance pay and payment in lieu of notice of termination. There is no entitlement to severance pay before severance actually occurs and the ESA has no provision for deeming a payment upon layoff to be severance pay when severance eventually occurs. Therefore, if an employee is eligible for severance pay, the employer must wait for severance to occur and then pay it promptly, subject to the employee's election to receive it or wait for recall. than the statutory notice of termination. •Indefinitely lay off the employee with immediate effect and provide payment in lieu of notice that is equal to or better than the statutory notice of termination. It is advisable for an employer who is unsure whether employees will be recalled to work out the various outcomes of the layoff at the beginning of the exercise. (Ont. C.A.). •National Automobile, Aerospace Transportation and General Workers Union of Canada (C.A.W. – Canada), Local No. 27 v. London Machinery Inc., 209 OAC 226 (Ont. C.A.). •Meridian Lightweight Technologies Inc. v. Radan (Oct. 27, 2011), C. Schmidt — Arb. (Ont. Lab. Rel. Bd.). About the Author Amandi Esonwanne Tips for employers It is advisable for an employer who is unsure whether employees will be recalled to work out the various outcomes of the layoff at the beginning of the exercise. Doing so will enable the employer to get it right from the start and avoid violating the applicable employment standards inadvertently. So, under the ESA, an employer that anticipates that an employee's layoff will become a termination has the following options: •Give the employee working notice of indefinite layoff equivalent to or better •Indefinitely lay off the employee with immediate effect and be prepared to provide termination pay equal to or better than the statutory minimum once the layoff becomes a termination under the ESA. •Be prepared to pay severance pay when severance occurs, subject to the employee's election right. FOR MORE INFORMATION SEE: •Elsegood v. Cambridge Spring Service 2001 Ltd., 2011 CarswellOnt 14782 Amandi Esonwanne is a Toronto-based lawyer. His areas of practice include labour and employment law, human rights, workers compensation, occupational health and safety law, and workplace investigation. He can be reached at eamandi@hotmail.com. Published by Canadian HR Reporter, a Thomson Reuters business 2014 5

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