ACTION UPDATE – Termination and Severance: Putting Workers First

February 22, 2010|Posted in: Campaign Updates

Alan Hall

Literally thousands of firms, both small and large, have gone bankrupt or insolvent in the current economic crisis. All too often their workers are being terminated without receiving back pay, vacation pay, proper termination notice or pay in lieu of notice, and severance pay. When employers fail to honour these termination obligations, workers and families suffer incredible hardships, with economic and social consequences that resonate throughout the community. While each situation is unique in the devastation it causes to individuals, families and communities, many lives are being shattered because the current laws and policies are not protecting workers’ termination rights.

Under federal law, when a firm goes bankrupt workers must line up along with other creditors without the preferred creditor status afforded to banks. This means that they rarely receive a dime through this process. Although workers can apply for money in bankruptcy situations from the Federal Wage Protection Program up to a maximum of $3254, this usually represents only a fraction of what they are owed. If firms close or become insolvent without declaring bankruptcy, the Federal Wage Protection program offers no protection at all. While labour unions often have the resources to successfully pursue the employers in court and through other actions, they often recover only a fraction of the money that workers are due. The non-union workers can file claims with the Ministry of Labour for their monies but soon discover that there is a wait of up to one year before their claims are investigated. By that time, the trail is usually cold and the financial damage to workers already done.

For the Windsor Workers Action Centre and CAW Local 195, this situation demanded action.  Over the last year, WWAC and Local 195 have collaborated in pushing the case for reform, working with unionized workers and non-unionized workers who had been terminated without receiving their due compensation. Those efforts, including petitions to the Ontario legislature, meetings with local MPs, MPPs and the leader of the provincial NDP, protests, occupations and rallies, recently culminated in separate meetings with the Ontario Minister of Labour and the Federal Minister of Human Resources. A number of reforms demands were presented at these two meetings.

At the provincial level, we proposed that the government establish a trust fund that would hold the vacation and severance money owed to employees in trust outside the control of the employer in the event of closure or bankruptcy. This would ensure that employers have the money to fulfill their legal obligations to workers, while greatly reducing legal and government costs associated with Ministry of Labour investigations, court proceeding

WWAC's Dr. Hall speaks with Ontario NDP leader Andrea Horwath regarding workers' pensions.

WWAC's Dr. Hall speaks with Ontario NDP leader Andrea Horwath regarding workers' pensions.

s, and the Wage Protection program. Failing the creation of a trust fund, we demanded that the government make major changes to its enforcement system to ensure timely investigation of termination claims. We also called for the establishment of a provincial wage protection program that would insure workers are paid the full severance and termination pay owed by delinquent employers as well as bankrupt employers.

At the Federal level, we sought changes in bankruptcy legislation that would give workers preferred creditor status. Along with parallel improvements to the Federal Wage protection program, we demanded that the EI policy of clawing back termination and severance payments be ended. In our view, termination related payments are deferred salary payments and should not be deducted from workers on unemployment. It is bad enough that these workers are unemployed with major reductions in their incomes without further impoverishing them through clawbacks.

There are a number of other issues that we are trying to address with respect to the current legislated rights for terminated workers. Paramount on our list of reforms is the fact that workers in small firms (less than 50 employees) are excluded from severance pay provisions, while more attractive mass termination notice and pay provisions are also only available for  workers in larger firms. In an economic context where more and more workers are employed for small employers, contexts where frequent termination is more likely and pay and benefits are often less attractive, this discrimination is fundamentally unjust. The fact that this discrimination is also more likely to affect women, younger people and minorities only serves to underscore the conclusion that the current Ontario Employment Standards Act directly contradicts human rights law by systematically discriminating against disadvantaged groups.

While the Ministers were noncommittal in terms of our reform demands, both Local 195 and the Workers Centre have had some success in getting action on their specific plant closure issues.  After an effective campaign of protests and legal action, Local 195 was able to negotiate a settlement for their members in the Aramco and Aradco plant closures. In addition, following our meeting with the provincial minister, the Ministry of Labour started its investigation of the claims from Product Action workers.

We have a long way to go to get the kinds of reforms we need to protect all workers, but we will continue to press our demands in every way possible. If you wish to join us or need assistance with a termination or other employment situation, contact us at 519 252 1212 or drop by the Centre at 328 Pelissier St. We are open Monday, Wednesday and Thursday from 10:00 to 3:00.


Full article published in the upcoming issue of The Scoop, March 2010, Issue 92.

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