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News of multinational retailers closing establishments across Canada has made headlines in recent years. Indeed, it is sometimes necessary for organizations to restructure their operations to remain competitive, which can often result in many employees within a company being terminated in the same period of time. In cases of mass terminations like these, the Ontario Employment Standards Act, 2000 (“ESA”) provides enhanced entitlements for terminated employees.
Under the ESA, a “mass termination” happens when an employer terminates 50 or more employees at the employer’s establishment within the same four-week period. “Establishment” includes multiple locations in the same municipality where the employer carries on business and not just one location. The four-week period is a “rolling window”, with a mass termination occurring at the first occasion of 50 or more employees being terminated within the same four-week period. The mass termination provisions do not apply when the number of terminated employees is 10 per cent or less of the employees who have been employed for at least 3 months and if the terminations were not caused by the permanent discontinuance of the employer’s business at the establishment.
The following rules apply to Ontario employers in a mass termination scenario:
Notice to Director of Employment Standards
An employer must provide the Director of Employment Standards with a Form 1 Notice of Termination of Employment (“Form 1”), which means that notice of termination will not be effective until the Director of Employment Standards receives the employer’s Form 1. The Form 1 must include relevant information regarding the mass termination, including the location(s) affected by the termination, the number of employees to be terminated, the dates upon which the terminations will become effective, the economic circumstances surrounding the termination, and the contact information for an employer representative. The Form 1 must also be posted in the workplace.
Notice of Termination or Pay in Lieu of Notice
Employers must also provide individual notices of termination in addition to providing and posting the Form 1. The length of individual working notice of termination, or pay in lieu of notice of termination, is determined by the number of employees who are terminated, provided as follows:
•If 50 to 199 employees are terminated, then the employer must provide eight (8) weeks’ notice of termination for each employee;
•If 200 to 499 employees are terminated, then the employer must provide twelve (12) weeks’ notice of termination; and
•If the number of employees terminated is 500 or more, then the employer must provide sixteen (16) weeks’ notice of termination.
Employers have the option of requiring employees to work during the notice period (working notice) or, alternatively, pay them termination pay in lieu of notice.
Employees may also be eligible for severance pay in addition to notice of termination (or alternatively, termination pay). Employees with five (5) or more years of service who are dismissed because of a “permanent discontinuance” which results in a mass termination are entitled to severance pay even if the employer does not have a payroll of $2.5 million or more.
Notice Period Requirements
Employers are also required to abide by the ESA’s general requirements during the notice period in addition to the special rules that apply in mass termination scenarios. This means, for example, that the employer cannot change any term or condition of employment or reduce wage rates, and they must continue its benefits plan contributions, if any, in order to maintain the employees’ benefits during the notice period.
The foregoing statutory entitlements are supplemented by the common law, or the body of similar case law decided by the courts. Together, their purpose is to provide employees with reasonable notice of the termination of their employment, so that they can begin to search for alternate employment before experiencing a wage loss. The termination provisions of the employment contract, if any, will determine whether the terminated employee will receive statutory or common law entitlements.
If you think you may fall under the ambit of a mass termination, it is best to seek the advice of an employment lawyer to help you navigate the law and your entitlements. Contact Monkhouse Law today for a free consultation!
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About the Author: Miguel Mangalindan is an associate lawyer at Monkhouse Law where he practices Employment, Human Rights and Disability Insurance Law.
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