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TORONTO — Ontario's Employment Standards Act may have to be beefed up to stop companies from using a loophole to avoid paying severance, Premier Dalton McGuinty said Tuesday after complaints that some workers were being left with nothing after decades of service.
The New Democrats have been charging that some American firms are buying small Ontario manufacturers and intentionally letting the work force fall below 50 employees so they can close the doors without paying severance.
Mr. McGuinty said he wants to know the real extent of the problem and make sure any loopholes are closed.
“If that's a real issue then I think we're going to have to find a way to address it,” he said. “We already have the only law of its kind in Canada on the books for those kinds of circumstances, and if there's a way for us to ensure that it's being respected, then we're prepared to look at it.”
The Employment Standards Act allows companies with fewer than 50 employees and a payroll of less than $2.5 million to avoid paying severance when they close. NDP Leader Howard Hampton has introduced a private member's bill that would lower the threshold for avoiding severance to 25 employees and a payroll of less than $1-million.
Mr. Hampton complained Tuesday that he'd heard Mr. McGuinty make similar promises before to follow up on the severance provisions of the act, and said there have been no changes to the law yet.
“This is the third time that we've heard the McGuinty government say that what the NDP is proposing is a good idea, but we wait six months and there's no action,” said Hampton. “This is a government that will say anything to get a good news headline, but often they fail to do what they promised.”
Progressive Conservative Leader John Tory said his caucus hadn't had time yet to review Hampton's bill, and he cautioned the government to proceed carefully as it moves to plug any loopholes regarding severance pay.
“I think you have to strike a balance, and it's very important to protect the rights of workers who lose their jobs,” said Mr. Tory. “But at the same time, make sure that we're not again setting up a barrier to investment in Ontario.”
Mr. McGuinty called on the federal government to stop short changing unemployed workers in Ontario by $4,000 compared with employment insurance benefits for laid off workers in the rest of Canada.
“That's grocery money, that's rent money,” he said.
Mr. McGuinty also said Ottawa must change federal law so employees are higher up on the list of creditors when a company closes.
“In some cases we have corporate creditors, banks for example, which are ranking higher than employees, and that's something we're also asking the feds to take a look at,” he said. “We think that employees, moms and dads with immediate, heavy financial responsibilities, ought to rank higher in priority.”
Just last week, Labour Minister Brad Duguid insisted there was “no issue” with the law that allows companies with fewer than 50 employees to close without paying the workers severance.
Workers from H.J. Jones-Sons, a packaging manufacturer in London, Ont., said an American firm purchased the company last year and intentionally let the number of employees fall below 50 before announcing it would close the plant, take the customers and patents, but not pay severance to employees who had been there for decades.
