Industry Committee on Feb. 15th, 2011

[Mike Wallace, Conservative, Burlington, ON]

That's the minimum, not a maximum.

[Matt Dooley]

It's the minimum, not a maximum. The severance and termination can be negotiated between the parties, so no maximum is set by statute.

[Mike Wallace, Conservative, Burlington, ON]

Does the statute set minimums?

[Matt Dooley]

Yes, the employment standards acts of the provincial and federal governments would set minimums. Typically, it's at least a week per year worked, but then there are different rules, depending on.... In the case of mass layoffs, as I've mentioned, the number of weeks you are owed is put at a higher amount, simply because.... The thought is that if 500 people are laid off at once, it's going to be difficult to find a job, so you're entitled to more.

[Mike Wallace, Conservative, Burlington, ON]

You don't have to comment whether it's fair or not, but from a legislative point of view, we could.... If the committee decides this is what they want left in this bill, would it be reasonable to say we changed the wording to confirm it's the minimum as per the provincial legislation, so that somebody doesn't negotiate a $300,000 severance package, and then that's coming out of the system?

I'm a little nervous that they're ahead of the people who have been working there, and they're only guaranteed $2,000. I'm not necessarily in favour of this, but if the committee decides if they want to go this route, maybe it should be “up to the minimum, by the provincial standards”.

If that wording went in there, would that work?

[Matt Dooley]

In legislation, we can draft wording that will reflect the intent that is wanted by Parliament. We can find wording or the justice department drafters can find wording to refer to another piece of legislation and state that the amount that is under sections 81.3 and 81.4 that were referred to in clause 2 and clause 3 are limited by the amounts set out in the relevant provincial employment standards act.

Certainly we've done that. In this bill we talk about the amounts owed to a pension plan and we refer to other legislation. Something similar could be worked out.

[Mike Wallace, Conservative, Burlington, ON]

Thank you.

Mr. Chair, if the committee decides to move forward on these two and pass these--I still think we have an opportunity to decide whether we're going to pass the bill or not, as amended--I would recommend they look at adding those types of wording so it doesn't leave an open-ended $300,000 or $400,000 severance package to somebody ahead of those who are working who can only get $2,000.

I'm going to say one other thing. This is why I'm not a big fan of private members' bills, because you can ask for what you want: the Library of Parliament will provide it. It doesn't go through the rigour of policy and legal review that other bills do. And I'm not blaming the private member for this. So that's why it's dangerous, in my view, to have in this case a two-clause bill making some significant changes to the employment processes we have in this country. I don't think it's been properly vetted. That's why simple things, like what we've heard now, can make a significant impact without the proper wording.

At this point, unless I'm convinced otherwise, I will not be supporting the bill as it's been amended.

Thank you, Mr. Chair.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Wallace.

Mr. Rafferty.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Thank you, Mr. Chair.

I appreciate Mr. Wallace's comments. I have a couple of comments to make myself.

In fact, I just want to clarify essentially what has just happened here. There were always two parts to this bill. There was the pension part of it, and there was termination and severance. Am I to understand that anything to do with pensions has now been removed from this bill?

[Matt Dooley]

That's my understanding.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

And the two clauses that remain only deal with severance and termination?

[Matt Dooley]

That's right.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

That being said—and I understand what Mr. Wallace is saying—I think he's maybe crying wolf a little here, because almost every case is going to be a case of a company or a corporation going bankrupt that either has a plan or a collective agreement in place or that does not have a collective agreement in place. In either case, exactly what the minimum requirement for that company to pay severance or termination is set out, whether or not there's a collective agreement.

If there is not a collective agreement, the standards in the territories and the provinces would apply in that particular case. There always have been minimums set out. In Ontario, I believe it's one week for every year that has been served. I don't think anybody in this room disagrees with that as a very bare, minimum standard.

If there are collective agreements that call for more, of course they would supercede the standards in the provinces and in the territories, and the collective agreement would kick into place.

But I can tell you, Mr. Wallace, that in my experience collective agreements are not that much richer than whatever the minimum standards are in the provinces and territories. When you see $300,000 severance packages, or $1.7 million severance packages or more, they are out of the realm of this sort of bill; it's not dealing with those. That would be the case of someone like Ms. Clitheroe and Hydro One, and those sorts of things, which this doesn't really deal with. So I would suggest, Mr. Wallace, that you're being overly concerned about this.

That being said, I believe that we have gone through a rigorous process. I can tell you that I certainly have been through a rigorous process with this bill, as has everybody who's been watching this bill and everybody in this committee. So we have reached a point at which we are ready to wrap it up. Mr. Chair, I'm quite happy to do so at this point.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Rafferty.

I have other people, however, on the speakers list.

We will go to Mr. Lake now, and then to Mr. Wallace.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I have just a couple of comments.

First, this changes the bill substantially. I don't remember a lot of witness testimony on these particular two clauses.

This creates an interesting kind of circumstance. At this point, I'm inclined to abstain on the bill. It looks as though it's going to pass anyway, as it is. That's the point I am at.

I'll take the opportunity, because it may be the last time I speak—although it may not be, depending on what else is said—to express my appreciation to the bill's sponsor for the spirit in which he has conducted himself as we have gone through the hearings and having meetings. In preparation for these, we have had the opportunity to meet on a few occasions. We haven't agreed on everything, obviously, as we've gone through, but I appreciate the spirit in which he has conducted himself, both in drafting the bill with good intentions, which we may not come to agreement on, but also in the collegial way he has carried himself as we have gone through the hearings.

Thank you for that.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Lake.

Just to inform the committee, I have Mr. Wallace, Mr. Cardin, and Mr. Rafferty on the speakers list.

Mr. Wallace.

[Mike Wallace, Conservative, Burlington, ON]

Thank you.

Just as a clarification, I think Mr. Rafferty is wrong in a couple of spots. First, the bill does not say that we will cover off the minimum based on the wording that's there now, based on provincial standards that have been set by provincial legislation. It's quiet, it seems, on it, so it doesn't say that.

Second, not all companies that go bankrupt are unionized, so they don't all have collective agreements. Even in some collective agreements, there are negotiated severance packages based on what might happen. But for argument's sake, let's say this company that's gone bankrupt is not unionized and the employees are entitled to the minimums but others could have negotiated, as has been indicated by staff, that severances will be at x dollars, which could be well above the minimum required by the province.

So what happens in a bankruptcy? Assuming there's no cash, because that's possibly part of the reason why they're bankrupt, all assets are sold, generating cash. The cash then gets divvied up. And as it works now, it will get divvied up by the taxes owed for employees. The employees who are working there at present get paid based on this. Ahead of that will be severance packages that had been pre-negotiated, and based on the wordings there, there are no criteria, there is no framework for that.

So if a company wants to negotiate huge severance packages, assuming it's never going to be bankrupt, they can do that. And they can do that with regular employees. They don't have to be unionized. The assets that are sold in that bankruptcy ahead of secured creditors would go to those people based on that. Frankly, I think there is potential for some fraudulent.... I wouldn't call it fraud, but misuse of that opportunity in the marketplace, if someone writes up severance packages, the company then goes bankrupt, they sell their assets, and they get their severance packages ahead of workers. It's a dangerous piece without some criteria around it, in my view.

Based on the wording that's there now, I'm asking my colleagues on the other side who are interested in moving forward to look at that, and at least put in some language that protects everybody involved in the bankruptcy, because everybody's affected, not just the severed or the terminated, but those who are working there now. I'm not sure whether it's fair that somebody who's working at the company on the day it goes bankrupt gets their wages covered up to $2,000, but others who have been terminated or severed a month later, or whenever that happens to be, get a different amount. I don't think that's necessarily right. I think it's a dangerous precedent and something that needs to be looked at.

I don't have the legal labour law expertise to be able to tell you what the ramifications are. We're making law here, ladies and gentlemen, and not just moving motions that the government should look at things. We're actually changing laws, and I think we have to be very cautious, because I don't think we have the appropriate information to make an appropriate decision.

Thank you, Mr. Chair.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Wallace.

Mr. Cardin, the floor is now yours.

[Serge Cardin, Bloc, Sherbrooke, QC]

I'm not going to say anything dreadful.

We voted on the title, and I was wondering if things were done properly. We are talking about An Act to amend the Bankruptcy and Insolvency Act and other acts. There was the Canada Business Corporations Act and the Companies' Creditors Arrangement Act, but since we are left only with the Bankruptcy and Insolvency Act, I am wondering if keeping the words “and other acts” is still relevant. I'm just talking about the title. It refers to other acts, but it actually strictly deals with the Bankruptcy and Insolvency Act. It is a detail, but...

[The Chair, Conservative, David Sweet]

Monsieur Cardin, would you like Mr. Dooley to comment on that?

[Serge Cardin, Bloc, Sherbrooke, QC]

Yes.

[Matt Dooley]

I would agree that by removing the rest of the provisions it is strictly dealing with the Bankruptcy and Insolvency Act. And it refers to pension protection in the title, which the bill no longer does. So I would think anything after “Bankruptcy and Insolvency Act” would be irrelevant to the bill as it now stands.

[The Chair, Conservative, David Sweet]

Then I may entertain an amendment after that, to the title.

Did you have something else, Mr. Cardin?

[Serge Cardin, Bloc, Sherbrooke, QC]

Are we going to keep the words “pension protection”, which are in parentheses? No? In short, just keeping the Bankruptcy and Insolvency Act would be closer to reality.

[The Chair, Conservative, David Sweet]

Okay. Monsieur Cardin, I have two other speakers on the list. We already voted on the title, so we would have to seek unanimous consent to reopen that and amend the title. I'll do that after I exhaust the speakers list and we'll come back to that, if that's okay.

Mr. Rafferty.