Mass Terminations: Employer Obligations and Employee Entitlements

 

Sometimes, like in the case of a corporate restructuring, an employer will find the need to terminate groups of employees or even entire business units at the same time. The Ontario legislature has addressed the potential adverse consequences of mass terminations by prescribing certain minimum statutory entitlements.

The Employment Standards Act, 2000 (“ESA”) defines a “mass termination” as any termination in which fifty or more employees at the employer’s establishment (which may include more than one location) are terminated within the same four-week period.

When a mass termination occurs, the employer must provide the Director of Employment Standards with a Form 1 Notice of Termination of Employment. Any notice to the affected employees will not be considered to have been given until the Form 1 is received by the Director. The Form 1 must include relevant information regarding the mass termination, including the locations 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. A copy of the Form 1 must also be posted in the workplace where it will come to the attention of the employees it affects.

In addition to providing and posting the Form 1, the employer must provide individual notices of termination to each employee.

Ordinarily, each employee’s notice entitlement would vary depending on his or her years of service. A mass termination under the ESA, however, provides all terminated employees with equivalent entitlements based on the number of employees terminated, as follows:

• If 50 to 199 employees are terminated, then the employer must provide eight weeks’ notice of termination to each employee;
• If 200 to 499 employees are terminated, then the employer must provide twelve weeks’ notice of termination to each employee; and,
• If the number of employees terminated is 500 or more, then the employer must provide sixteen weeks’ notice of termination to each employee.

The mass termination rules do not apply where the number of employees whose employment is being terminated represents not more than ten per cent of the employees who have been employed for at least three months at the establishment, and none of the terminations are caused by the permanent discontinuance of all or part of the employer’s business.

An employer can provide work to an employee who has been given notice of termination on a temporary basis in the thirteen-week period after the termination date set out in the notice without affecting the original date of the termination and without being required to provide any further notice of termination to the employee when the temporary work ends. If an employee works beyond the thirteen-week period, however, the employee will be entitled to a new written notice of termination as if the previous notice had never been given. The employee’s period of employment will then also include the period of temporary work.

In addition to the rules governing mass terminations, employers are required to abide by the ESA’s general requirements during the notice period: an employer may not change any term or condition of employment or reduce wage rates, and must maintain the employees’ benefits.

If you are an employer or an employee who thinks 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 your rights and obligations.

Minken Employment Lawyers is your source for expert advice and advocacy on today’s employment law issues. Whether you are an employer or an employee, we can help. Contact us to see how.

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