Accounting for Law
Employment & Labour

Termination pay for non-employees

An understanding of s. 75 of the Employment Standards Act (ESA), which deals with termination pay obligations, can help employers manage changes in a cost-effective way, Toronto employment lawyer Doug MacLeod writes in Condo Business.

In the article, MacLeod, principal at MacLeod Law Firm, tells the story of George, a shopping mall security officer who lost his job because a new security company took over the service.

While it feels like a dead end for George, it may not be, the article says.

“The new security company is likely required to pay George termination pay, even though it has never employed him,” writes MacLeod.

Section 75 of the ESA states "a building services provider (including a condo corporation that decides to bring these services in-house) is generally required to pay termination pay to certain individuals it has never employed,” the article says.

Under the ESA, a building services provider is defined as “a person who provides building services for a premises and includes the owner or manager of a premises if the owner or manager provides building services for premises the person owns or manages,” MacLeod writes in the real estate publication.

The special termination obligation applies to employees who handle food services and cleaning services in a building; operate a building’s parking garage or parking lot; or are involved with property management services relating only to the building in question.

In the article, MacLeod advises that employees be asked to sign an employment contract with a termination clause to minimize costs related to s. 75 claims.

“Building service providers can curtail significant termination costs by taking one simple step: requiring all employees to sign an employment contract with a termination clause before the person commences employment,” he writes. “This reduces the amount of termination pay that a provider pays an employee to the minimum standards set out in the ESA, which is eight weeks for employees with more than eight years of service. This can be contrasted to the provider’s obligation to pay an employee up to 104 weeks (or more) in termination pay if no termination clause exists.”

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