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No severance pay for outsourced staff • Who pays the premium?

No severance pay for outsourced staff

Someone whose job is outsourced, who then accepts employment with the outsourcer, can’t turn around and collect severance pay from his previous employer, the Ontario Superior Court of Justice has ruled.

The case involves 45 former Bombardier Aerospace technology workers in Downsview, Ont., whose department was outsourced. The workers accepted employment with the new company and then filed a claim for severance pay.

Bombardier pointed to a provision in Ontario’s employment standards legislation that states when a business is sold, and the employees continue with the new employer, then the employment is considered to be continuous. The workers argued outsourcing a department is different from selling a business, but the court disagreed.

The workers also argued that the terms and conditions of their employment were fundamentally different from those at Bombardier. But the section of Ontario’s Employment Standards Act dealing with the sale of a business is silent on this question, the court said. An employee unhappy with the terms being offered could have refused employment with the outsourcer and claimed wrongful dismissal, it said.

Who pays the premium?

An employee on disability who is fired without cause does not have to deduct disability benefits from a wrongful dismissal award, the Ontario Superior Court of Justice has ruled.

TNT Logistics, a Jacksonville, Fla.-based firm, lost a wrongful dismissal suit filed by Lorne Dowling, a former dispatch supervisor in Ontario who was receiving long-term disability benefits. The company sought to have the damages reduced by deducting the value of the LTD benefits during the notice period. If not, TNT argued, Dowling would be paid twice for the same time period.

But the court refused to reduce the damages. It said Dowling paid a premium out of his own pocket for the disability benefits, which were being paid to him by a third party. It also pointed out that there was nothing in his employment contract to indicate he could not receive both LTD and employment benefits.

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