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Ontario Hansard - 15-June1987


Hon. Mr. Wrye: Before I start, I should just say to the honourable members that I will be introducing this bill later today, but I think through an oversight they already have copies of the bill which will aid them in having a look at this, as I go through the statement.

Later today I will be introducing a bill to provide greater protection for Ontario workers who may fall victim to layoffs and terminations because of plant closures and other kinds of business discontinuance. It will also require businesses to provide disclosure to the Minister of Labour and to the employees.

The bill is designed to broaden the scope of the Employment Standards Act by providing individual workers who are terminated with the right to severance pay. In addition, it is designed to lengthen the notice of termination period received by individual workers and to ensure that workers on lengthy temporary layoff will have a right to termination pay if they are not given notice.

A worker's rights to notice of termination and to severance pay are enshrined in the Employment Standards Act. These rights manifest a philosophy recognized by this House that the relationship between an employer and an employee is to be just and equitable. The legislation I am introducing today goes considerably further than the existing provisions of the act in guaranteeing the fairness of that relationship.

Severance pay recognizes that, over a period of years, a worker develops employer-specific skills, substantial seniority and associated benefits. When a long-serving employee loses his or her job, those employer-specific skills become redundant and those associated benefits are lost. Severance pay is compensation for those losses. That is why, effective today, under this legislation, any individual worker with five years' employment at an enterprise which has an annual payroll of at least $2. 5 million would be eligible for severance pay in cases of termination or lengthy layoff.

En élargissant la définition du mot employeur à un groupe de corporations affiliées ayant une feuille de paie annuelle de 2,5 millions de dollars, cette loi assurera le versement d'indemnités de cessation d'emploi à un plus grand nombre de personnel. Cette caractéristique du projet de loi et les améliorations apportées à la Loi sur les Normes d'Emploi prouvent que notre gouvernement reconnaît la dignité et la valeur des hommes et des femmes travaillant dans notre province.

In the past, terminated workers were not eligible for severance pay unless the business was discontinued and there were at least 50 workers terminated within a six-month period. Under this bill, a worker can be part of a group or can be the only individual terminated and still be entitled to severance pay.

The worker would qualify for severance pay regardless of the cause of the termination. The termination could arise because a business closes or because its operations were reduced. In the case of reduced operations, any worker with five years' employment who is laid off for 35 weeks in any 52-week period would qualify for severance pay.

Terminated workers would also have the option of renouncing recall rights and claiming the severance pay immediately or retaining recall rights and having the severance pay placed in trust with the director of the employment standards branch. Interest will be paid on these funds.

The legislation would ensure protection for workers who are employed at a company that is part of a larger enterprise. For instance, if a worker was employed at a company with a payroll of only $2 million, the worker would be eligible for severance pay if the payroll of that company and related companies, combined, was at least $2.5 million.

In the past, the calculation of severance pay has been based on a worker's completed years of employment. This meant, for example, that a worker with five years and 11 months of employment with an employer received credit for only five years' service. The 11 extra months did not count. This legislation would provide credit for those months.

Any employer who fears that the measures in this bill would cause financial hardship may apply for permission to meet severance pay obligations by instalment over a three-year period. Each case will be reviewed on its merits.

In instances where the workers affected are members of a labour union, the legislation would permit the union to bargain a settlement of severance claims on their behalf. This provision would allow a union to negotiate a settlement that attempts to protect the workers' rights to unemployment insurance.


Severance pay was never intended to substitute for unemployment insurance benefits, and it should not be classed as earnings for that purpose. The position of this government on that issue is well documented and I can assure this House that the government has by no means abandoned its efforts to protect the severance pay of workers. The battle is far from over.

In many instances in the past, workers have been hampered in seeking alternative employment once an employer has announced a closure, because they must stay on the job until the closing date to be entitled to severance pay. This has produced frustrations for workers wanting to leave early to start a new job. The legislation would resolve this problem by permitting a worker to give two weeks' notice during the statutory notice period without jeopardizing his or her claim to severance pay.

Besides addressing severance pay issues, this bill also seeks to improve the provisions for notice of termination to individual workers. Workers with less than two years' employment have been entitled to only one week's notice, while those with less than five years on the job have been given only two weeks' notice.

This bill would also require employers to provide written notice of termination of at least one week to anyone employed for more than three months, but for less than one year. Two weeks' notice would be required if a worker has been employed for at least one year but less than three years. An additional week's notice would be required for each completed year of employment up to a maximum of eight for workers with eight or more years' employment.

In the past, there has been no requirement to give notice to a worker on temporary layoff regardless of the length of the layoff. As with severance pay, any worker temporarily laid off for 35 weeks within a 52-week period would have the right to termination pay if that worker had not been given notice.

There are special provisions under the Employment Standards Act which require longer notice periods of between eight and 16 weeks to employees who lose their jobs in mass layoffs. A lengthening of these periods could place many Ontario employers in the untenable position of having to serve notice of termination on employees before knowing whether such layoffs will be necessary, with the associated uncertainty for workers. For this reason, the government has chosen not to lengthen the mass-layoff notice periods.

The legislation I am introducing today is designed to give the worker, the community and the government information on why a closure is taking place, what the impact will be and what the employer is prepared to do to help the employees. It would require employers to be more actively involved in helping the workers and their families to adjust. Once proclaimed, in cases of mass layoffs employers would be required to disclose to employees and to the minister the following information:

First, an explanation of the circumstances surrounding the intended mass layoff or closure;

Second, an indication of consultations already carried out with its employees and the community, and proposed consultations;

Third, a profile of affected workers, such as age, occupation and length of service;

Finally, proposed adjustment measures to assist laid-off workers, including an indication of the number of employees expected to benefit from the proposed adjustment measures.

The legislation would provide that until such time as this disclosure statement is reviewed by the Minister of Labour and determined to be in accordance with the requirements, the statutory period of notice to workers affected by mass layoffs would not begin.

The measures in this bill will increase and ensure benefits for workers who have not been protected adequately in the past, but beyond those measures lies the challenge to create an active early warning system, capable of preventing or reducing closures and mass layoffs before they happen.

My colleague the Minister of Industry, Trade and Technology (Mr. O'Neil) will soon be announcing the appointment of the industrial restructuring commissioner. It will be the commissioner's task to identify problem situations in their early stages and to attempt to develop creative options in selected restructuring situations.

The changes to the Employment Standards Act I am proposing today put Ontario ahead of any other jurisdiction on the continent when it comes to protecting workers from the contemporary forces of economic change adversely affecting them and their families. It is the view of this government that in 1987 it is unacceptable to the people of Ontario for society to respond to workers who are losing their jobs with anything less than sensitivity, understanding and respect. Workers in this province have a right basic economic protection against layoffs and closures. More important, they have a right to retain their dignity in the face of adversity; a right to know their worth as human beings has not diminished because they are without a job.

I am proud that these amendments I will be bringing forth recognize those rights and ensure their enhanced protection. The changes I am proposing are responsible and reasonable but, most important, they will bring a new measure of economic justice to working men and women in Ontario.

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