Ont. severance ruling will cost employers

Staff terminated because disability frustrated employment contract will now receive severance
By Todd Humber
|Canadian HR Reporter|Last Updated: 05/24/2005

Employers in Ontario now have to pay severance to workers who can no longer carry out their jobs because of a disability.

The Ontario Court of Appeal, the highest court in the province, said a section of the Employment Standards Act that exempted employers from paying severance to a worker whose employment contract had been “frustrated” because of an illness or injury is unconstitutional and no longer in force.

Stuart Rudner, an employment lawyer with Miller Thomson in Toronto, said the ruling means employers are now on the hook for severance when a contract is frustrated due to injury or illness and, considering severance can be as high as 26 weeks’ wages, the cost to employers could be significant.