In Wood v. CTS of Canada Co. the Ontario Court of Appeal recently clarified the duties of an employer in the context of a mass termination of employees, including the timing for the delivery of notices.
The case arose from the closure of a manufacturing plant operated by CTS of Canada Co. On April 17, 2014, CTS gave written notice to its employees that it was closing its Streetsville, Ontario plant and that their employment would terminate on March 27, 2015. It subsequently extended the termination date for most employees to June 26, 2015.
The closure of the plant triggered the employer’s “mass termination” obligations under the Employment Standards Act, 2000 (“ESA”).
The statute imposes a number of requirements in the case of mass terminations. An employer who terminates fifty or more employees in a four-week period must provide at least eight weeks’ notice of termination. An employer required to give notice under the statute must also serve the ESA Director with the prescribed information in Form 1, and post the Form 1 in the employer’s establishment on the first day of the notice period.
Notice is not deemed to have been given until the Director receives the Form 1 information.
CTS did not serve and post the Form 1 information until May 12, 2015, twelve days into the mandatory eight-week notice period, and more than a year after it gave notice to its employees.
A class action was brought on behalf of former employees against their common employers, CTS of Canada Co. and its parent corporation, CTS Corporation. The class consisted of seventy-four former active employees who did not sign a release with the appellants and were not dismissed for cause.
The motion judge found that the employer was required to serve and post the Form 1 information when it gave notice to employees on April 17, 2014, and that its notice was not effective until it did so on May 12, 2015. The employer’s failure to complete the Form 1 Notice invalidated the thirteen months of working notice that it provided prior to filing and posting the Form 1 information.
The motion judge also concluded that the employer was not entitled to credit for working notice for any week in which an employee worked overtime contrary to the ESA or in which the employee was forced to work overtime that had a significant adverse effect on the ability of the employee to look for new employment. Further, in the case of the five employees who worked more than thirteen weeks beyond their original separation date, the employer was only entitled to credit for common law working notice from the date of the letter providing them with notice of their actual termination date.
The Court of Appeal allowed CTS’ appeal from this decision in part.
The Court agreed with CTS that the motion judge erred in finding that they were required to serve and post the Form 1 Notice on April 17, 2014. In the Court’s view, CTS was only required to serve and post the Form 1 information at the beginning of the eight-week notice period and, since it was twelve days late in doing so, the class members are entitled to a further twelve days’ pay in lieu of notice.
The Court disagreed with CTS, however, that the motion judge erred in finding that they were not entitled to credit for working notice in any week in which an employee worked overtime contrary to the ESA or in which the employee was forced to work overtime that had a significant adverse effect on the ability of the employee to look for new employment. As the Court explained, in determining whether an employer is entitled to credit for working notice, it is relevant to consider the quality of the opportunity given to the employee to find new employment. The primary objective of reasonable notice is to provide the dismissed employee with an opportunity to obtain alternate employment; therefore, exceptional workplace demands on an employee during the notice period may warrant disentitling an employer to credit for some or all of the working notice.
The Court also disagreed with CTS that the motion judge erred in finding that, in the case of five employees who worked more than thirteen weeks beyond their original separation date, it was only entitled to credit for common law working notice from the date of the letter providing them with notice of their actual termination date. An employer may continue to provide temporary work to employees for up to thirteen weeks after the termination date specified in the notice of termination given to an employee without giving a further notice of termination. However, if the temporary work exceeds thirteen weeks, fresh notice is required.
Employers contemplating a mass termination must be careful to comply with all of the statutory requirements for notifying employees and relevant government officials. Wood confirms that the minimum amount of time to provide Form 1 notice is the statutorily required notice period, which will depend on the number of employees terminated. If less than the proper statutory notice is given, employees will be entitled to pay in lieu of notice for the balance of the minimum statutory notice period. Employers must also refrain from directing or allowing employees to work substantial overtime hours, and they must be mindful of the thirteen-week limit on temporary work following the initial termination date set out in the notice of termination.
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