In a decision that will be sure to have ripple effects beyond Ontario’s borders, an Ontario Superior Court judge has ruled that for the purposes of calculating an employer’s payroll, in order to determine whether an employee is entitled to statutory severance pursuant to section 64 of the Ontario Employment Standards Act, 2000, one looks at the employer’s entire payroll, not just that of its employees in Ontario.
The case is important because under a previous line of cases, the most recent of which being Altman v. Steve’s Music, 2011 ONSC 1480 (CanLII), the court had held that it was only the employer’s payroll in Ontario that was to be considered.
For employers with operations both inside and outside of Ontario, what the case means is that even if your operations in Ontario are modest, if the company’s total payroll exceeds the statutory limits of $2.5 million dollars, employees working in Ontario may now be entitled to statutory severance pay. This decision has the potential to increase an employer’s contingent liability with respect to severance obligations by a factor of more than three!