Workers' Severance Pay Must Be Priority, CAW Urges Labour Minister

February 11, 2010, 2:45 PM EST

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Canadian Auto Workers President Ken Lewenza met today with newly- appointed Federal Minister of Labour Lisa Raitt to discuss the federal government's role in protecting workers' severance pay.

Lewenza asked the Minister to put the issue on the agenda of her upcoming meeting with provincial/territorial ministers of labour on February 20 and 21. The union has had similar discussions with the Ontario Minister of Labour, Peter Fonseca.

"It makes no sense at all, especially given the recession, that workers should face double, even triple jeopardy when they lose their jobs," Lewenza said. "Our laws currently punish these workers. Instead, we need to ensure that employers actually pay severance and that bankruptcy laws give priority to the severance owing to workers. Furthermore, our laws should require that severance pay is left in the hands of the worker, not clawed back by EI or taxes," he said.

The CAW delegation, which met with the Minister in Toronto, included Gerry Farnham, President of CAW Local 195 which was forced to blockade Windsor-area auto parts plants to secure a partial payment of millions owing in severance pay.

The union asked that the federal government put an end to EI rules that require workers to use up their severance pay before they start receiving EI benefits, along with other EI improvements.

The union also proposed that the federal Wage Earner Protection Program maximum of $3,323 per employee be raised and cover a broader range of insolvency situations, and further that outdated federal tax rules be amended as to the amount of severance pay a worker can transfer tax free to an RRSP.

"In the end we have to amend our bankruptcy laws so they recognize the priority of the money and benefits owing workers," Lewenza said. "It's wrong that workers are always at the back of the bus, behind banks and others. Meanwhile, Ottawa can take the lead in amending the Canada Labour Code so that federal employers are required to hold monies owed on separation "in trust" - from vacation pay to severance. They should set the pace and encourage the provinces to do the same with their labour standards."

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