In our last edition, we wrote about the
rules for collective dismissals. In this article, we consider
an exception that may prove useful in today's difficult
The provisions of the Act respecting Labour Standards
(LSA) concerning an employer's failure to comply with
the notice periods and indemnities that apply to collective
dismissals were discussed in Commission des normes du
travail v. Industries Troie inc. The Court of
Québec ruled in this case that the sudden and significant
loss of contracts could constitute, in certain specific
circumstances, an unforeseeable event exempting an employer from
having to pay a collective dismissal indemnity to dismissed
Collective Dismissal Procedures Under The LSA
An employer who, for economic reasons, implements a collective
dismissal of not fewer than ten employees in the course of two
consecutive months, must give notice to the Minister of Employment
and Social Solidarity within eight weeks. If the employer fails to
give such notice, or gives insufficient notice, it must pay each
dismissed employee an indemnity equal to his or her regular wages
for the same period. To be exempted from the payment of collective
dismissal indemnities, the employer must establish a case of a
superior force or an unforeseeable event preventing the employer
from giving such notice to the Minister within the required time
The LSA also requires an employer to give individual
written notices to each of the dismissed employees. This notice
varies from one to eight weeks, depending on the length of
continuous service of the employee. Failure to do so will lead to
the payment of a compensatory indemnity equal to the period of
notice. The employer is exempt from giving this individual notice
or from paying the compensatory indemnity only in the case of a
superior force, as the concept of unforeseeable event does not
apply in the case of an individual dismissal.
It is important to recognize that these two procedures provided
for under the LSA are not cumulative, although the
employee will receive the greater of the indemnities to which he or
she is entitled.
The Case Of Industries Troie And The Unforeseeable
In Industries Troie, the court had to determine if the
sudden and significant loss of contracts constituted a likely event
that the employer should normally have been in a position to
foresee, considering the information available at the time.
In this case, despite the difficult situation in the clothing
industry since 2003, the employer had adopted some measures to
achieve stability and steady economic growth. According to the
evidence, nothing could have led the employer to predict the quick
and radical downturn of orders at the end of the summer of 2004.
Regular contracts obtained over the last few years had caused the
employer to believe it could maintain its activities. However, in
August 2004, an unexpected loss of major contracts caused
production of the employer's product, jeans, to be reduced by
5,000 pairs per week. The court found that this constituted an
unforeseeable event that a reasonably diligent person in the same
circumstances and operating the same type of business would
probably not have foreseen.
The employer acted in good faith by immediately giving a notice
of dismissal to its employees and by giving them individual
notices. The sudden and significant loss of orders prevented the
employer from giving the Minister the required 12 weeks' notice
before proceeding with the collective dismissal.
Lessons For Employers
Considering that any exception in law must be narrowly
construed, and that a loss of or a significant downturn in
contracts or orders is often foreseeable by the employer, relief
from providing notice to the Minister or a compensatory indemnity
to employees in a collective dismissal for an unforeseeable event
will not happen very often.
Nevertheless, in certain specific situations, such relief is
possible but ultimately depends on the specific facts that led to
the unforeseeable event in the first place. In such situations, you
must consider if a reasonably diligent person, under the same
circumstances and operating the same type of business, would
normally have been in a position to foresee this significant loss
of contracts or orders, in light of the information available at
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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