Canada: How Do The Mass Termination Provisions Of Ontario's Employment Standards Act, 2000, Work?

Last Updated: May 29 2019
Article by Jennifer Costin

In Ontario, the Employment Standards Act, 2000 ("ESA"), provides for certain rules when an employer terminates at least 50 or more employees in one of its establishments within a 4 week timeframe. In such a situation, the ESA requires that the employer:

  • Provide a more generous provision of notice than with non-mass terminations, being 8 weeks' notice for 50-199 employees, 12 weeks' notice for 200-499 employees and 16 weeks' notice for 500 or more employees.
  • Submit a Form 1(Notice of termination of employment) to the Director of Employment Standards, before the notice period. This Form 1 must also be posted in the workplace where it is likely to come to the attention of the employees it affects on the first day of the notice period.

However, these rules will not apply to 50 or more terminations, if the number of terminated employees does not represent more than 10% of the employees that 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 at the establishment.

Form 1 is not an onerous requirement. The information sought includes the name of the employer, the number of employees who work at the location, the number of employees who are being terminated, classified by the way in which they are paid, the date(s) on which it is anticipated that their employment will be terminated and the economic circumstances surrounding the termination. Form 1 can trigger the provision of significant government services to affected employees and the more employees terminated, the more notice needed to trigger the services.

In one recent Ontario case1, the issue was raised as to how these mass termination rules intersect with the greater common law notice of termination provided by CTS of Canada Co. and CTS Corporation (collectively "CTS") to some of its employees terminated. In that case, CTS was closing one of its manufacturing plants and on April 27, 2014, it gave written notice to 77 employees that it was closing the plant and their employment would be terminated as of March 27, 2015, which was later extended to June 26, 2015. However, CTS did not serve and post its Form 1 until May 12, 2015, which was 12 days into the mandatory 8 week ESA notice period and over a year from when it provided its actual termination notice to its employees.

A class action was brought on behalf of 74 of these impacted employees. The motion court concluded that CTS was required to serve and post Form 1 when it originally gave actual notice to its employees of their terminations on April 27, 2014, rather than at the start of the 8 week notice period required by the mass termination provision of the ESA (as was argued by CTS). The motion judge found that as a result, the April 27, 2014 notice was rendered invalid and that CTS lost the benefit of the 13 months of working notice it had provided. This was an expensive conclusion for CTS, when multiplied by the 74 class action employees.

Not surprisingly, CTS appealed this decision and the Ontario Court of Appeal agreed with it2. The Court of Appeal found that CTS was, "only required to serve and post the Form 1 information at the beginning of May 2015. Since CTS was 12 days late in serving and posting the Form 1 notice, class members are entitled to a further 12 days' pay in lieu of notice." The Court of Appeal noted that the purpose of the ESA is to provide certain minimum standards and not to impose requirements on employers in excess of these statutory minimums. Should an employer choose to give notice to employees in excess of the prescribed minimum statutory notice, it must only comply with providing Form 1 as of the minimum period of notice required by the ESA, in this case 8 weeks.

The employees appealed this decision to the Supreme Court of Canada and such appeal was dismissed.3

For employers anticipating a "mass" termination, this decision confirms that there may be two separate dates of importance – one being when the actual notice of termination is provided, which may be more generous if determined in part, by common law principles and the relevant required ESA termination notice date (for CTS, 8 weeks prior to June 26, 2015), for which the Form 1 must be filed with the Director of Employment Standards and posted in the workplace.

Footnotes

1 2017 ONSC 5695 (CanLII).

2 2018 ONCA 758 (CanLII).

3 2019 CanLII 32861 (SCC).

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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