Temporary Relief from ESA Termination and Severance Pay Obligations for Hospitality and Related Industries


Temporary Relief from ESA Termination and Severance Pay Obligations for Hospitality and Related Industries

Date: December 18, 2020

On December 17, 2020, the Ontario government filed a new regulation under the Employment Standards Act, 2000 (ESA), Ontario Regulation 764/20: Terms And Conditions Of Employment In Defined Industries – Hospitality, Tourism And Convention And Trade Show Industries (Regulation). As stated by the government, the Regulation provides certain employers with an alternative to putting termination and severance pay into trust for unionized employees laid-off for 35 weeks or more and who are waiting to be recalled.

The Regulation applies to a wide range of businesses in the convention and trade show, hospitality and tourism industries including, for example, hotels, restaurants, bars and recreation, amusement and gambling facilities. Notably, the regulation only applies to unionized employees. Non-union employees remain on deemed IDEL as addressed in our FTR Now from yesterday, Ontario Government Announces Extension of Temporary Relief from ESA Termination and Severance Provisions.

Under the ESA, unionized employees who have been laid off will generally be deemed terminated when their layoff reaches the threshold of 35 weeks in a period of 52 consecutive weeks.  Currently, section 67 of the ESA permits an employee to make an election when their layoff reaches that threshold either to be paid their termination and severance pay or to retain their right to be recalled. For unionized employees who elect to retain their recall rights, the trade union and the employer must attempt to negotiate an agreement to place the termination or severance pay in trust, failing which the trade union may request that the monies be paid in trust to the Director of Employment Standards.

Under the Regulation, an employer and trade union may agree not to apply the current election rules in section 67.  Instead, the parties may agree that the trade union can make the election between payment of termination and severance and recall rights on behalf of some or all of the employees in the bargaining unit.  If a trade union makes this election, the Regulation provides that:

  • the election is binding on the employee in respect of whom it is made unless the employee elected to be paid prior to the trade union’s election
  • the employee may not renounce the right to be recalled before the date agreed to by the employer and the trade union
  • the trade union may not renounce the right to be recalled on behalf of the employee.

Moreover, the Regulation temporarily eliminates the need to place termination and severance pay into trust where the parties have agreed to apply the Regulation and the trade union elects to retain recall rights on behalf of the employees.

Effectively, this means that the employer and trade union can agree to extend the time that employees will remain on layoff with recall rights, and delay the time when termination and severance pay would need to be paid (whether directly to employees or to be held in trust).

It is important to note that the Regulation preserves the right of individual employees to make an election in two specific circumstances: (1) if the employee elects before the trade union makes its election under the agreement with the employer; or (2) if the trade union fails to make an election.  In either of those scenarios, the employee may elect to renounce their recall rights and be paid any termination and severance pay owing.

In light of this, employers in the hospitality, tourism and convention and trade show industries should consider meeting with their trade unions as soon as possible to try to negotiate an agreement with the unions as permitted under the Regulation.

The Regulation came into effect on December 17, 2020 and will be revoked on December 17, 2021, which will permit agreements with trade unions of up to one year in duration.

If you have any questions related to the Regulation and its impact on your organization, please contact your regular Hicks Morley lawyer.

The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©