Applying the latest changes to the Employment Standards Act, 2000 (“ESA”) to real-life situations can be complex, even for Employment Standards Officers!
A recent blog post by Chris Sinal (New Amendments to the Employment Standards Act, 2000 May Require Employers to Find Themselves Guilty of Violating the Act) introduced you to the changes, which became effective February 20, 2015 and included the removal of the $10,000 limit on an Employment Standards Officer’s order for the payment of wages owed to a single employee.
Recently, a client asked me to determine how the February 20, 2015 date impacted a complaint being decided upon post-February 20, 2015, but dealing with a termination which occurred before February 20, 2015. The employee brought a Claim for pay in lieu of notice and severance pay, arguing he had been terminated without cause in April of 2014. The employer took the position that the employee resigned in April 2014 and was not entitled to either the pay in lieu of notice or severance pay, which totaled approximately $55,000.
The Employment Standards Officer provided a letter on February 23, 2015, outlining her findings that the employer had in fact terminated the employee and requested the employer to voluntarily provide the $55,000 payment to the employee, failing which an Order would be rendered.
At first glance, it appeared that the decision was being rendered after the effective date of the changes to the ESA, so the $10,000 limit would no longer apply, with the result that the employer could indeed be ordered to pay the full $55,000. However, a closer look at the language of section 103(4) of the ESA addressing the removal of the $10,000 limit identified that the limit still applies to wages that became due to the employee prior to February 20, 2015.
So when do termination and severance pay become due? The ESA clearly provides it is the later of the employee’s next regular pay day or seven days after termination. As a result, the removal of the $10,000 limit will only impact terminations which occur after February 20, 2015.
Consequently, in this case, the employer actually had the option between appealing the decision or paying an order to pay wages in the amount of $10,000, plus a 10% administration charge for a total of $11,000.
The lesson for employers here is to carefully scrutinize the findings of an Employment Standards Officer – which can sometimes be inconsistent with the legislation!