News of large multinational retailers closing establishments
across Canada has dominated the headlines of late. There has been a
spotlight on the impact of such closures on the tens of thousands
of Canadians who will very soon be without employment. In
cases of mass terminations like these, the Ontario Employment
Standards Act, 2000 ("ESA") (like its counterpart in
some other jurisdictions) provides enhanced arrangements for
employees who find themselves let go and suddenly in an
over-saturated labour market.
For purposes of the ESA, a "mass termination" occurs
when an employer terminates 50 or more employees at the
employer's establishment in a 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 (i.e., walking out the door) 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
In the event of a "mass termination" the following
rules will apply to Ontario employers:
Individual Notice of Termination
In the event of a mass termination, 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 and not the
individual's length of service. Notice is provided as
If 50 to 199 employees are terminated, then the employer must
provide eight (8) weeks notice of termination for each
If 200 to 499 employees are terminated, then the employer must
provide twelve (12) weeks notice of termination.
If the number of employees terminated is 500 or more, then the
employer must provide sixteen (16) weeks notice of
Employers continue to have the option to
require employees to work during the notice period (for example,
during a period of staggered closure or for any other reason) or,
alternatively, pay them termination pay in lieu of notice. Subject
to any contractual restrictions or other collectively bargained
rights, it is permissible for an employer to require some employees
to work the duration of the notice period while providing others
with pay in lieu.
Requirements during Notice Period
In addition to the special rules that apply in cases of mass
termination, the employer is also required to abide by the
ESA's general requirements during the notice period. For
example, the employer cannot change any term or condition of
employment or reduce wage rates. The employer must continue
its benefits plan contributions, if any, in order to maintain the
employees' benefits for the duration of the notice period.
In addition to notice of termination, employees may also be
eligible for severance pay. Eligible employees who have been
employed by the employer for five or more years 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 $2.5M or more.
Notice to the Ministry
In the event of a mass termination, an employer must provide the
Director of Employment Standards with a Form 1 Notice of
Termination of Employment ("Form 1"). Importantly, notice
of termination will not be effective until the Director of
Employment Standards receives the employer's Form 1. The
employer is required to advise the Director on the Form 1 of the
location(s) where terminated employees work and the number of
employees being dismissed amongst other information. The Form
1 must also be posted in the workplace.
When a mass termination takes place on a national scale,
employers must ensure that they are complying with the requirements
of the applicable employment standards legislation in the relevant
provinces. Employers must also consider individual contracts of
employment and any obligation set out in a collective agreement.
Special considerations may arise in a unionized workplace, such as
recall rights and elections relating to severance pay.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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