Severance Pay Entitlement To Consider Global Payroll - Ontario Superior Court (Divisional Court) - June 2021

From Sherrard Kuzz

This week, the Ontario Superior Court of Justice (Divisional Court) set aside a decision of the Ontario Labour Relations Board (“OLRB”) in which the OLRB ruled that payroll means only Ontario payroll for purposes of severance pay entitlement under the province’s employment standards legislation. Describing the OLRB’s decision as “unreasonable,” “illogical” and “flawed,” the Divisional Court held the calculation of payroll includes an employer’s global payroll.

The decision has broad, financial implications. It extends the obligation to pay severance pay to any Ontario employer whose global payroll is at least $2.5 million, including the payroll of any related entity such as a parent organization.

While possible, it is unlikely this decision will be further reviewed. If it is, we will keep our readers apprised. For now, the law in Ontario has changed; payroll for the purposes of severance entitlement under Ontario’s Employment Standards Act, 2000, includes an employer’s global payroll, not its Ontario payroll.

Click here to read the full briefing note.