Stelco layoffs: the facts, the law and what to expect

Hundreds of Stelco workers in Hamilton and Nanticoke are being laid off with no return date, while Ottawa and the company argue over whether the layoffs are even allowed. Here are the facts as reported, what the union agreements and Ontario law say, how courts have ruled in similar cases, and what a laid-off worker can expect.

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The facts so far

• September 28: Stelco, owned by U.S.-based Cleveland-Cliffs, said it would lay off up to 500 workers and idle its cold-rolled and galvanized steel lines at Hamilton Works, citing U.S. tariffs, weak demand and imports (The Canadian Press, The Globe and Mail).
• October 5: Industry Minister Mélanie Joly gave the company five business days to show how it will honour the commitments it made when Ottawa approved the 2024 purchase. Those five-year undertakings include continuing to employ at least the same number of unionized employees.
• October 7: Layoff notices began in Hamilton. The union expects about 330 layoffs there over three weeks, the first set for October 11, and 40 to 50 at Lake Erie Works as early as October 24. They affect unionized workers so far.
• October 9: Stelco replied that it is not in breach and is going ahead (CBC News). The minister's office said all options are on the table.

The company's CEO calls the layoffs temporary and says workers will be recalled if Canada and the U.S. reach a steel deal. Its letter speaks of idling the lines indefinitely.

The unions and their agreements

The workers are represented by the United Steelworkers: Local 1005 at Hamilton Works, Local 8782 at Lake Erie Works and Local 8782-03 on the Lake Erie pickle lines.

Local 8782 publishes its agreements: the Lake Erie Works Basic Agreement dated July 1, 2022 and the Pickle Lines agreement, July 1, 2022 to June 30, 2027. The Lake Erie Works agreement says:

• Recall rights (clause 7.03): 24 months with under 2 years of service, rising to 48 months with 5 years or more. A letter on permanent layoffs (Item 10) extends them to two times your seniority, to a maximum of 6 years.
• Severance (Item 10): an employee laid off 35 weeks in 52 who is not entitled to recall gets severance pay topped up to 3 weeks for each year of service, to a maximum of 78 weeks.
• The trade-off (Item 10): recall rights end automatically when an employee elects to receive severance pay.
• Supplementary unemployment benefit (Item 10): $350 a week for members covered by that letter, $275 otherwise.

On the pickle lines, employment ends after a layoff of more than 18 months, or 30 months with more than 5 years of service.

For Hamilton Works, the public text we found is the 2017 Basic Agreement, which ran to June 30, 2022. It has the same recall scale and a severance top-up of 2 weeks per year, to a maximum of 52. Local 1005 has the agreement in force now; check its terms with your steward.

What the law adds

Ontario's Employment Standards Act (ESA) sets the floor, and the calendar decides, whatever word the company uses.

• 13 weeks. A layoff is temporary if it lasts no more than 13 weeks in any 20 (s. 56).
• Up to 35 weeks. It can run to less than 35 weeks in 52 if, for example, the employer keeps paying into your benefits or pension, or you receive supplementary unemployment benefits.
• At 35 weeks. A layoff of 35 weeks or more in 52 severs your employment (s. 63). With 5 years or more at an employer with a payroll of $2.5 million or more, severance pay is owed: a week of regular wages per year of service, to a maximum of 26 (ss. 64 and 65).
• A choice. If you still have recall rights, you choose: take your termination and severance pay and give up recall, or keep recall while the money is held in trust (s. 67). The agreement's trade-off above says the same thing.

An example with made-up facts: a Lake Erie Works employee with 12 years of service would be owed 12 weeks of ESA severance pay, and the agreement's top-up, where it applies, would bring that to 36 weeks.

How courts have ruled

Long recall rights don't postpone the 35-week mark. In C.A.W. Local No. 27 v. London Machinery Inc., 2006 CanLII 8711 (ON CA), a unionized welder had recall rights for up to two years. His employer argued that kept the layoff temporary. The Court of Appeal disagreed: what counts is an actual recall. Not recalled at 35 weeks, he was deemed terminated, owed termination pay and entitled to the s. 67 choice.

"Permanent" on paper didn't end a layoff benefit. In Canadian General-Tower Limited v. United Steel Workers Local 862, 2008 ONCA 404, an employer refused supplementary unemployment benefits because it never expected to recall 23 laid-off workers. An arbitrator held they were on temporary layoff under their plan while they had recall rights, and the Court of Appeal let that stand. Each plan has its own wording.

Ottawa has taken this mill's owner to court before. In 2009 the minister applied under the Investment Canada Act against U.S. Steel, then Stelco's owner, seeking an order to comply with its employment and production undertakings and a penalty of $10,000 a day. The Federal Court of Appeal upheld the law in United States Steel Corporation v. Canada (Attorney General), 2011 FCA 176. CBC News reports the case was settled in 2011. That fight is between Ottawa and the company: it may decide whether jobs come back, not what a laid-off worker is owed in the meantime.

What to expect

• Now: you remain an employee with recall rights. Ask your union about the supplementary unemployment benefit.
• Week 35 without a recall (mid-June for a layoff that began October 11): termination pay and, with 5 years of service, severance pay come due, with the choice between the money and your recall rights.
• If 50 or more people are terminated at one establishment within four weeks, notice is 8, 12 or 16 weeks depending on the number (s. 58), instead of the usual 8 at most.

Who to call

In a union, ESA rights are enforced through the collective agreement and a grievance, not a Ministry complaint (s. 99). Start with your steward, and keep every letter with its date.

Not in a union? Courts can award more than the ESA minimum. The calculator shows both.

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