The severance loophole

Posted on May 9, 2008 in Debates

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TheStar.com – comment/editorial – The severance loophole
May 09, 2008

In a province buffeted by a high dollar, soaring energy costs, a shrinking U.S. market, and relentless competition from the Far East, Queen’s Park cannot protect Ontario’s economy from recession.

The province could, however, take a meaningful step to protect workers who lose their jobs in these troubled times. To that end New Democratic Party Leader Howard Hampton has put forward a private member’s bill that would entitle more people to receive severance pay when their jobs disappear.

Under the current Employment Standards Act, Ontarians can be denied severance pay if the company where they work employs fewer than 50 people and carries a payroll that’s less than $2.5 million. As a result, some workers, like Paul Waringer of St. Thomas, are being left without severance despite, in his case, working 16 years at a packaging plant. That doesn’t seem fair, especially since his employer, H.J. Jones-Sons, had about 100 employees a year ago, according to union officials. Downsizing dropped staff to below the 50-worker threshold before the plant’s closing was announced by its U.S. owner.

Calling this a “loophole” that allows some companies to escape their obligations to provide severance pay, Hampton introduced a bill this week that would lower the threshold to fewer than 25 workers and a payroll under $1 million. But rather than back this reasonable sounding reform, Labour Minister Brad Duguid suggested it was a non-issue and tried to pass the buck to Ottawa.

Yes, Ottawa should do more for the unemployed, but so should Queen’s Park, and severance is within the province’s jurisdiction.

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