You Heard Us The First Time: Global Payrolls Determine Severance Pay Obligations In Ontario

In Hawkes v. Max Aicher (North America) Limited,¹ the Divisional Court strongly affirmed and expanded the 2014 ruling in Paquette v Quadraspec Inc² that an employer's entire national payroll must be taken into account when determining its obligation to provide severance under the Employment Standards Act, 2000, S.O. 2000, c. 41 ("ESA"), and not just its payroll in respect of Ontario-based operations. In light of Hawkes, not only must national payroll be considered, but so too must an employer's global payroll.

Severance Pay Under the ESA

Section 64(1)(b) of the ESA, which deals with entitlement to severance pay in Ontario that is not the result of a permanent discontinuance of all or part of the employer's business at an establishment, states that an employer will only be obligated to provide severance pay to terminated employees if "the employer has a payroll of $2.5 million or more". In Paquette, the employer's payroll in Ontario was less than $2.5 million,