An arbitrator has ruled that Wescast Industries Inc. breached its collective agreement with Unifor, Local 4207 by failing to provide proper notice of a plant closure and by withholding severance and termination pay owed to laid-off employees at its Wingham, Ont., casting facility.
The ruling directs Wescast to compensate affected employees in accordance with the terms of the collective agreement and the Employment Standards Act, 2000. In a press release, Unifor pegged the value of the payments to 200 former workers at about $15 million.
“This ruling affirms what we have said all along—that Wescast blatantly violated the collective agreement in addition to Ontario labour law,” said Unifor Ontario Regional Director Samia Hashi. “Our union would not stop until every worker is paid what they are owed, plus interest.”
The dispute arose from two policy grievances filed by the union. The first grievance alleged that the employer provided inadequate notice of a plant closure in violation of the Plant Closure Agreement within the collective agreement. The second grievance contended that Wescast failed to pay severance and termination pay after the 35-week temporary layoff period ended, as required under the ESA.
Background
Wescast, a subsidiary of Bohong Industries Group, has operated in the automotive industry for over a century. The company’s Wingham casting facility (WCW) historically supplied its machining divisions with cast manifolds. In April 2023, Wescast placed employees at WCW on temporary layoff and subsequently informed customers that production would be “temporarily suspended” as of July 30, 2023.
However, it did not inform employees or the union of this decision until June 12, 2023, during collective bargaining discussions.
The employer argued that the shutdown was temporary and that WCW was expected to reopen in 2026 following equipment upgrades. However, the union maintained that the closure effectively amounted to a permanent layoff requiring severance payments under the collective agreement and the ESA.
Arbitrator’s findings
The arbitrator ruled that the employer’s failure to provide six months’ notice of the closure, as required by Article 22.08 of the collective agreement, breached the Plant Closure Agreement. The union successfully demonstrated that employees were deprived of critical information needed to make informed decisions about early-exit packages and recall rights.
Furthermore, the arbitrator rejected Wescast’s argument that WCW was merely “temporarily closed” and found that:
- The layoff exceeded 35 weeks, triggering the termination and severance pay provisions under the ESA.
- The Plant Closure Agreement required the employer to provide eight weeks of notice or pay in lieu, plus severance at a rate of 2.4 weeks per year of service.
- Employees were entitled to severance regardless of whether WCW reopened in the future.
The arbitrator also examined the interpretation of the Current Programs Commitment within the collective agreement. The employer contended that the term “customer” referred to Wescast’s machining divisions, which could independently decide to terminate production. The arbitrator rejected this view, concluding that “customer” referred to external buyers such as Ford, GM, Volvo, Pierburg, and Borg Warner.
Since these customers had not terminated contracts, the arbitrator ruled that Wescast violated the Current Programs Commitment by ceasing production at WCW.
Remedy and orders
The arbitrator ordered Wescast to pay all outstanding termination and severance pay to employees who elected to abandon recall rights. The payments, calculated according to the Revised Spreadsheet (Exhibit 7.3), must be issued by Feb. 28, 2025, with interest applied from April 12, 2024. Employees who retained recall rights or failed to make an election will have their severance funds held in trust by the Director of Employment Standards.
Additionally, the arbitrator ruled that:
- Employees who accepted early-exit packages without full disclosure of the plant closure must be compensated for the difference between their severance entitlement and the package received.
- The Employer must also pay severance to employees who declined recall or were otherwise terminated, subject to further resolution between the parties.
- Post-judgment interest will accrue at 5% per annum if payments are not made on time.
Conclusion
This decision reinforces the importance of adherence to collective agreement obligations regarding notice of closure and severance entitlements. Employers cannot circumvent statutory and contractual severance obligations by labeling a closure as “temporary” when layoffs exceed statutory limits. The arbitrator remains seized of the matter to resolve any outstanding implementation issues, with further hearings scheduled in March 2025 if needed.
For more information, see Unifor, Local 4207 v Wescast Industries Inc., 2025 CanLII 9734 (ON LA).
