Employee Entitled to Severance Pay In Addition To Termination Pay

In Mattiassi v. Hathro Management Partnership Deputy Justice Prattas of the Ontario Smalls Claim Court addressed the issue of an employee’s entitlement to be paid a lump sum for severance pay pursuant to the Employment Standard Act, 2000 regardless of any payments made to the employee for termination pay under the Employment Standards Act, 2000 and or working notice.

Shirley Mattiassi was employed by Hathro Management Partnership for approximately 26 years in the capacity of a legal assistant. Hathro Management provided Ms. Mattiassi with 54 weeks of working notice of termination. When the working notice period expired, Hathro Management provided Ms. Mattiassi with a gratuitous payment representing approximately 2 months of her wages.

Ms. Mattiassi then brought an action against Hathro Management seeking payment of her severance pay in accordance with the Employment Standards Act, 2000. Hathro Management argued that since the working notice and gratuitous payment were in excess of the combined entitlements of Ms. Mattiassi under the Employment Standards Act, 2000 for termination pay and severance pay, Ms. Mattiassi was disentitled to any further payments.

The Court did not accept Hathro Management’s position and stated that the Employment Standards Act, 2000 “has clearly set up two distinct and separate entitlements” and that “[e]ach provision stands on its own, serves a different purpose and provides different and distinct benefits or entitlements to the employee”.

The Court further indicated that the Employment Standards Act, 2000 “requires payment in lieu of notice only in the event of failure to give the required notice of termination. On the other hand, payment of severance pay is mandatory. It cannot be avoided by giving notice.”

As a result, the Court determined that Ms. Matiassi was entitled to receive the 26 weeks of severance pay claimed, since the working notice provided to Ms. Matiassi could not reduce the severance pay owed to her. Ultimately, severance pay must be calculated separately from any working notice provided, since working notice is “earned pay” and severance pay is provided as “compensation”.

This case illustrates the importance of clearly calculating an employee’s Employment Standards Act, 2000 minimum entitlements to termination pay and severance pay separately.  Should an employer fail to do so, it risks being exposed to costly litigation to determine whether the requirements under the Employment Standards Act, 2000 have been satisfied and whether the employee is entitled to further payments under the Employment Standards Act, 2000. It is therefore important for both employees and employers to review and consider the Employment Standards Act, 2000 requirements to ensure it is always satisfied.

Prepared by Olanyi Parsons, B.A. (Hons.) LL.B.

For a consultation, please feel free to contact Olanyi Parsons Law.

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