Long-time worker pushes for severance pay after layoff

Worker and others were laid off after shutdown of slot machines at racetrack

This instalment of You Make the Call involves a worker who was laid off after 12 years of employment.

Hiawatha Horse Park and Entertainment Centre was a facility in Sarnia, Ont., that hosted a variety of entertainment activities, including live horse racing, broadcast horse racing, a driving range, a go-kart track and, for a period of time, slot machines. It also occasionally held concerts.

Wendy Ellis began working for Hiawatha in May 2000 as a permanent full-time custodian, with no written contract of employment. She worked without event until July 26, 2012, when Hiawatha provided her with written notice that she would be placed on indefinite layoff effective Sept. 29 — more than eight weeks later. Hiawatha indicated that it was reducing its workforce due to the Ontario government’s decision to end the slots program there — the slot machines were removed in April 2012 — which also would affect the horseracing operations. The company also said the eight weeks’ notice and the layoff were in accordance with the Ontario Employment Standards Act, 2000.

Hiawatha issued all employees laid off in 2012 record of employment (ROE) forms, including Ellis. Most of the ROEs were issued to employees who worked on the seasonal activities such as go-karts and horseracing, whose employment ended when the season ended — and whose employment began after the slots closed in April. The total number of ROEs issued to employees who weren’t seasonal, didn’t quit, or whose employment ended previous to 2012 was 22.

Hiawatha’s payroll in 2011 was about $1.2 million and less than $900,000 in 2012 up to the point Ellis was laid off.

Hiawatha eventually recalled Ellis to work on July 22, 2013, but this was more than 35 weeks after her layoff. As a result, Ellis filed a claim for severance, arguing that under the Employment Standards Act, 2000, the layoff became a termination of employment after 35 weeks. Since she had 12 years of service, Ellis claimed Hiawatha owed her severance pay.

You Make the Call

Was the employer not obligated to provide severance pay once the layoff became a termination?


Was the employee entitled to severance pay?

IF YOU SAID the employer did not have to provide severance pay — or any other compensation — to the terminated employee, you’re right. The Ontario Labour Relations Board noted that Ellis didn’t have a written employment contract, so the only entitlement to severance pay would be through what was stipulated under the act. Under the act, Ellis was entitled to eight weeks of notice or termination pay, which was covered by the more than eight weeks’ notice Hiawatha provided before her indefinite layoff came into effect. As a result, Ellis wasn’t entitled to any termination pay, said the board.

The act also stipulated that employees were entitled to severance pay if they had more than five years of service, which Ellis easily met with her 12 years with Hiawatha. However, in addition to the service time requirement, the entitlement only came if the terminated employee was one of at least 50 employees terminated within a six-month period or the employer had an annual payroll of at least $2.5 million.

The board found the seasonal employees did not owe their layoffs to the closing of the slots — which was the reason for Ellis’ layoff — and were laid off later, months after the slots closed. The total number of employees who were laid off within six months of the closing of the slots — characterized as a discontinuance of a part of Hiawatha’s business — was less than 30, including Ellis. Additionally, Hiawatha’s payroll was far below the act’s stated minimum for severance pay to be owed, said the board.

"(The) discontinuance (of a part of the business) did not lead to 50 or more Hiawatha employees having their employment severed within a six-month period," said the board. "Obviously, the seasonal employees who started work after the slots closed and who were laid off at the end of the racing season did not owe their layoff to the closure of the slots. Even assuming that everyone else to whom an ROE was issued in respect of employment in 2012 had their employment severed because of the closure of the slots, the total number of such employees is fewer than 30."

The board determined Ellis was not entitled to severance pay and the working notice she received before her layoff effective date met the requirements under the act. Therefore, she wasn't entitled to any additional compensation. Ellis’ claim was dismissed.

For more information see:

Ellis v. 405730 Ontario Ltd., 2015 CarswellOnt 2435 (Ont. Lab. Rel. Bd.).

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