Dec 5

Employment Law Small v. Large Business

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Small Businesses and Large Companies

According to Industry Canada in 2012, approximately 70% of businesses in Canada are small businesses, meaning that they have less than 100 total employees. Of this portion, about 53% (or 37% of the total workforce in the private sector) of small businesses employ less than 20 employees. On the flip side, Medium size business (100-499 employees) make up of about 20% of the private sector, and 10% of companies have more than 500 employees.

Differences in company sizes can mean major differences for employee entitlements and rights within the workplace, and often times both employees and employers do not realize what they are and are not entitled to. Although there are numerous differences, the topic for today’s blog post will focus on how the size of a business can impact an employee’s entitlement to severance pay as well as their ability to have any disability accommodated, as these issues often arise in the area of employment law.

Severance Pay

Severance pay under the Employment Standards Act, 2000 (the “ESA”) has a very specific meaning. As opposed to the colloquial definition where any sort of payment at the time of termination is often called ‘severance pay,’ severance pay under the ESA is only available to employees under very specific circumstances. Severance pay will typically be paid in addition to any termination pay that an employee is entitled to.

To be eligible, employees must have worked with an employer for a period of five years or more, and either that 1) the severance occurred as part of a mass lay-off of 50 employees or more in a six-month period, or 2) the employer has a payroll of $2.5 million or more. As mentioned previously, approximately 37% of the private sector work force are employed in small businesses with less than 20 employees. With such a small number of employees, it is uncommon that the total payroll would exceed $2.5 million.

However, common law notice is significantly longer than the statutory minimums, and so the practical differences between compensation from a large, and small, business, is usually nothing.

Accommodation

Under section 17 of the Ontario Human Rights Code, R.S.O. 1990, c.19, an employer has the responsibility to accommodate an employee’s disability, whether it is a pre-existing condition or began on the job. However, the legislation specifies that an employer’s obligation goes as far as the point of ‘undue hardship,’ where it becomes too taxing for an employer to continue accommodating an employee.

In considering what constitutes ‘undue hardship,’ a judge or arbitrator would consider costs, the available of outside sources of funding, if any, and health and safety concerns. With these factors in mind, small businesses would more likely be able to satisfy an arbitrator that they cannot accommodate an employee due to ‘undue hardship.’ Although cost is the not the only factor, it may be enough to persuade a court if accommodating an employee would be significantly detrimental to the operation of a small business.

The size of an employer can have a definite impact on what an employee is entitled to in their workplace, especially in the award of potential damages. In Boucher v. Wal-mart Canada Corp, [2014] O.J. No. 2452, Wal-mart had $110,000.00 in punitive damages awarded against them for harassment. The courts have held that larger corporations may need larger damage awards to deter them from misconduct in the future. Small businesses on the other hand would not likely be liable to a similar quantum of damages. In the case of Silvera v. Olympia Jewellery Corp., [2015] O.J. 3225, the plaintiff was awarded $10,000.00 in punitive damages against the her small business employer, even after a series of sexual assaults and harassment. Olympia Jewellery Corp operates a single store in Toronto.

Layoffs

Large companies obviously lay off more people, considering changes in the workforce, that they go through outsourcing and other systemic changes to their workforce. As well the relationships are more distant and so layoffs are seen by employers as being less personal, and therefore easier and more likely. Therefore while those working at smaller businesses might get less when they are let go in severance pay they might be safer from layoff.

Very often, it may be hard to determine which category a specific business may fall into. It is important to consult with an employment lawyer that can advise you of the options open to you, whether employer or employee.