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Group Termination Severance Quiz

Calculating Group Termination Severance Payments

SITUATION

ABC, an automotive parts manufacturer shuts down its Ontario plant and lays off all 47 employees. Under Ontario’s ESA laws, employers must pay severance when they terminate 50 or more workers within a 6-month period or their monthly payroll is at least $2.5 million. The payroll of the closed plant is less than $2.5 million, but when you take into account ABC’s facilities in the US, its total payroll is $8.5 million.

QUESTION

Do ABC’s US employees count toward its payroll calculations in determining if severance is due to the Ontario employees?

Yes. The employer’s payroll is the combined amount that the company must pay to all of its employees, regardless of where they are located.
No, but if the U.S. employees were located in Canada, their payroll would count toward severance calculations.
No. Only Ontario employees’ payroll is covered by the Ontario group termination laws.

ANSWER

3. Only Ontario payroll is relevan...

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