Labour relations board cuts fine in half for struggling restaurant

Restaurant in Kingston, Ont., failed to pay workers properly

The Ontario Labour Relations Board sliced a struggling restaurant’s fine in half after it failed to give holiday pay to 23 employees.

In April 2004 an employment standards officer said Stoney’s Waterfront Café in Kingston, Ont., was committing a number of violations. It was not paying holiday pay correctly and not all workers were receiving the province’s new minimum wage. There were also issues with vacation pay and regular wages.

The officer issued a notice of contravention under the province’s Employment Standards Act and, in addition to issuing an order to pay $2,589 to the employees, fined the company $250 for every worker who didn’t receive full holiday pay. The company appealed. It said a bookkeeping error had caused the problem and said if it was forced to pay the $5,750 fine it would be in danger of bankruptcy.

The board said that in deciding if it should reduce the fine the factors to be considered were whether the conduct was deliberate or an error, whether this was a first violation, the proportionality of the fine and the hardship it could cause. Another major consideration was general deterrence. Minimum standards for workers must be respected to ensure employees’ rights are protected. Companies must be aware of their requirements and must not attempt to solve financial problems by not paying employees in full. Strict enforcement serves as a deterrent and promotes fair competition, it said.

The board doubted the employer’s claim that not paying full holiday pay was a bookkeeper’s error. But it decided the greatest argument in favour of reducing the fine was proportionality. The original fine was more than twice the amount owed.

Since this was a first violation, and in light of the restaurant’s financial situation, a fine of roughly 100 per cent was called for. It was a significant penalty, would serve as a deterrent to this employer, and provides an incentive to comply with the act, it said.

The fine was reduced to $2,500, which the restaurant was given four weeks to pay.

For more information see:

1203125 Ontario Ltd. v. Ontario (Director of Employment Standards), 2005 CarswellOnt 6421, [2005] O.L.R.B. Rep. 717 (Ont. L.R.B.)

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