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Ontario Court Rules Severance Pay Is Based on Global Payroll

Ontario Court Rules Severance Pay Is Based on Global Payroll

​Ontario’s Divisional Court—a branch of the Superior Court of Justice in Canada’s largest province—unanimously ruled in June that more employers in Ontario will now have to take their global payroll into account in determining an employee’s entitlement to severance pay.According to the Ontario Employment Standards Act 2000 (ESA), employers in the province with a payroll of more than $2.5 million must compensate an employee for the loss of a job with five or more years of service to the company upon termination, explained Hilary Page, a lawyer with SpringLaw in Toronto. In the Hawkes v. Max Aicher (North America) Ltd. case, the Divisional Court overturned an earlier Ontario Labor Relations Board decision that the Can$2.5 million (approximately 1.98 million USD) threshold was limited to an employer’s Ontario payroll.”Prior to the Hawkes decision, employers could take the position that the payroll criteria only applied to payroll within the province of Ontario,” said Darren Avery, an attorney with Filion Wakely Thorup Angeletti LLP in London, Ontario. “This meant an employer could avoid paying severance pay if they only had a small operation in Ontario—and thus a payroll of less than $2.5 million.” The Hawkes decision changed that stance, Avery continued. “The court gave a clear signal it will consider an employer’s global payroll—whether it be from a different province or even a different country—in determining whether the statutory $2.5 million threshold is met.”Under the ESA, a notice of termination caps out at eight weeks, while severance pay can be issued up to 26 weeks, Page said. “Most employees are entitled to more than the amounts in the Employment Standards Act,” said Stephen Wolpert, an attorney with Whitten & Lublin in Toronto.Employers now need to reconsider their obligations when firing employees, Wolpert stated. The court decision will also increase termination and severance costs for many employers in Ontario.”As a result, some larger companies who had small operations and small payrolls in Ontario may have previously thought they were exempt from paying statutory severance pay,” Wolpert added. “Now it is clear that they will not be exempt.”Case BackgroundThe plaintiff worked for a Hamilton, Ontario-based subsidiary of European steel company Max Aicher until 2015 when his employment was terminated without cause.Fired employees have long been entitled to various protections under Ontario’s ESA, Wolpert stated.The plaintiff then filed a complaint with Ontario’s Ministry of Labor, claiming he was entitled to termination pay, vacation pay and severance pay based on Max Aicher’s global payroll. The Germany-based manufacturer’s global payroll far exceeds $2.5 million, Page noted.  Initially, an employment standards officer reviewed the claim in 2017, granting the employee termination and vacation pay. The officer also determined the plaintiff was not entitled to severance pay because his former employer did not have a payroll of at least $2.5 million in Ontario. The Ontario Labor Relations Board agreed with the employment standards officer’s decision in 2018, reiterating that payroll for the purposes of severance pay under the ESA was limited to an employer’s Ontario payroll. The plaintiff then appealed this decision.”The road to this decision was long,” Page said. …

Mexican Labor Laws Enforced Against US Companies

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Mexican Labor Laws Enforced Against US Companies

​Within the last few months, U.S. employers doing business in Mexico have felt the effects of the enforcement mechanisms of the U.S.-Mexico-Canada Agreement (USMCA). It is perhaps counterintuitive to many employers that the USMCA would result in labor enforcement actions against U.S. companies under Mexican law. But it does.Most readers—especially in Texas, whose largest trade partner is Mexico—will be aware that the USMCA:Went into effect on July 1, 2020.Is the result of President Donald Trump’s renegotiation of the North American Free Trade Agreement.Has a goal of enforcing the stronger labor laws that Mexico was required to enact as part of the USMCA.While the history of enforcement of labor laws in Mexico might lead some U.S. companies operating there to assume the same level of enforcement in the future, the USMCA also established an Interagency Labor Committee, which has the power to refer complaints of denials of labor rights in Mexican facilities to the U.S. trade representative, who, in turn, may take enforcement action.The first two such enforcement actions have been related to U.S. companies. This may be unsurprising—it makes sense that the U.S. trade representative has particularly good enforcement mechanisms with respect to U.S. companies that have facilities in Mexico. As a result of the first petition under the USMCA’s “Rapid Response Labor Mechanism,” General Motors entered into a comprehensive plan to address labor practices at its Silao, Mexico, facility in July.In August, the Mexican-based subsidiary of an American company, Cardone Industries, with operations in Matamoros, Mexico, entered into an action plan and agreed to pay damages, including back pay, to Mexican workers. The action plan was the result of a petition filed by the AFL-CIO and other unions.These action plans are agreements with the U.S. government and give the U.S. government power to enforce them. In effect, a U.S. government agency can now enforce Mexican labor law against the companies in these agreements. These first instances of success unions have had under the Rapid Response Labor Mechanism of the USMCA mean it is likely there will be more of these types of actions.Not only is the greater enforcement of Mexican labor laws important for U.S. companies to note, but also, as companies with cross-border operations develop environmental, social and governance (ESG) programs, they need to note how USMCA actions can impact the “S,” or social aspect, of their ESG disclosures. Due to the focus on ESG by investors and the Securities and Exchange Commission, now is the time for companies to evaluate compliance with Mexican labor standards, with respect to both their subsidiaries in Mexico and the companies in their supply chains.E. Phileda Tennant an attorney with Vinson & Elkins LLP in Houston. © 2021 Vinson & Elkins LLP. All rights reserved. Reposted with permission of Lexology. …

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Canadian Employers Establish COVID-19 Policies

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Canadian Employers Establish COVID-19 Policies

Large companies across various industries in Canada are setting up their own employee COVID-19 vaccination policies amid a flurry of new federal, provincial and local pronouncements that stop short of requiring vaccines for private-sector workers.Canada’s government announced in August it will require vaccination this fall for the federal workforce—with accommodations or alternative steps, such as testing and screening, for those who can’t be vaccinated.Ontario recently announced it will require people to be fully vaccinated and provide proof before entering certain high-risk indoor settings, including restaurants, bars, nightclubs, fitness centers, conference spaces, casinos, sports venues and concert halls, effective Sept. 22. Exceptions will apply to those with medical exemptions and children younger than 12.While Ontario has announced these vaccination passport rules for certain private businesses, “those mandates [generally] have not extended to employees,” said Trevor Lawson, an attorney with McCarthy Tétrault’s labor and employment group in Toronto. However, vaccination mandates have been imposed on the private sector in health care and child care settings.The government largely allowed individual private-sector employers to implement their own vaccination policies, Lawson said. Several major private-sector employers recently announced policies requiring employees to provide proof that they’re fully vaccinated by a particular date,  he noted.”That is the policy that we’ve seen many employers in Canada announce over the past couple of weeks,” Lawson said. He added that some employers are requiring those who can’t be vaccinated for valid reasons to continue to work from home.Canada’s five largest banks reportedly have announced employee vaccine mandates, and the Canadian National Railway and Air Canada have made similar moves. Air Canada will not offer testing as an alternative to vaccination and warned that employees not inoculated by Oct. 30, except for those with qualifying valid exemptions, may be placed on unpaid leave or dismissed.Employers requiring employee vaccinations must make exceptions for those who aren’t inoculated for medical or religious reasons, as they are protected under the country’s human rights laws, Lawson noted. Employers, however, may ask employees to provide proof of their exemptions, such as a note from a health practitioner or a religious exemption letter from a faith leader, he said.A Basis for Employer ActionOntario’s vaccine requirements for customers entering a high-risk business could help employers justify requiring vaccines for employees, said Lisa Goodfellow, an attorney with Miller Thomson in Toronto. It would be strange if unvaccinated customers couldn’t enter a restaurant but unvaccinated servers could work there, she noted.While government agencies may not have issued full-fledged vaccine mandates for private-sector employees, various other policies appear to have that effect.Ontario in August issued a regulation requiring businesses to comply “with any advice, recommendations and instructions” from the public health officer demanding that the business establish and enforce a COVID-19 vaccination policy, Lawson noted.That same month, Toronto’s medical officer strongly recommended local businesses institute a vaccination policy to protect workers and the public from COVID-19, and Toronto Public Health launched a workplace toolkit that includes guidance on developing a vaccination policy.Peel Public Health, covering a region near Toronto, issued …

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British Columbia Updates Rules for Investigations, Working Children

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British Columbia Updates Rules for Investigations, Working Children

​British Columbia, Canada, has broadened and clarified its ability to investigate employment compliance matters and will tighten rules for hiring children younger than 16 years old under changes to the province’s Employment Standards Act (ESA).The changes arose from 2019 amendments to the ESA meant to ensure employment standards are evenly applied, properly enforced, and reflect workers’ and employers’ evolving needs. New Investigatory FeaturesAs of Aug. 15, 2021, new rules went into effect governing investigation, complaint and determination processes under the ESA. Among other changes, British Columbia’s employment standards director may conduct an investigation to ensure compliance with the ESA “at any time for any reason,” and expand a probe stemming from one worker’s complaint, according to the amendments.”The director of employment standards has always had the power to investigate compliance with the ESA and Employment Standards Regulation regardless of whether or not a complaint has been filed,” said George Vassos, an attorney with Littler in Toronto. “The changes now make it clear that the director can initiate or stop or postpone an investigation ‘at any time or for any reason.’ “In addition, he said, “The director will now be able to expand an investigation of one worker’s complaint to the broader workplace if needed. This certainly strengthens protections for workers.”Other employees need not sign on to the original complaint for the director to broaden the investigation, noted Ritu Mahil, an attorney with Lawson Lundell LLP in Vancouver. If the wider probe isn’t completed or doesn’t resolve the matter, the director must rule on the original complaint.The employment standards director isn’t required to hold hearings when investigating but must give investigated parties the opportunity to respond, Mahil noted. When an investigation concludes, the law now requires the director to issue a written report summarizing the findings, she said.The report must be provided to the complaining party, the person cited in the complaint and anyone whom the director believes deserves an opportunity to respond. “This step provides procedural fairness for everyone involved before a decision is made,” Vassos said.While fired employees must file any complaint within six months of their last day of work, the new rules allow a worker an extension if the director believes that special circumstances delayed the filing or that an injustice would otherwise occur without the extra time.The director must investigate any complaint considered to be filed validly. Under the new provisions, the director can now use alternative dispute resolution during an investigation, calling on a neutral mediator to help settle or arbitrate matters. Vassos called the option beneficial for employers and employees.Child Employment RulesESA amendments also put into place several new rules going into effect on Oct. 15 related to hiring children, including specifying the type of work permitted and permissions required.”New changes to employment standards will better protect young people at work by raising the general working age in British Columbia from 12 to 16 and defining the types of jobs appropriate for those under 16,” the government said in a press release, which noted …

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