In Ontario, provincially-regulated employers must provide enhanced statutory notice of termination (or pay in lieu thereof) when a significant number of employees are dismissed – a scenario referred to as a “mass termination.”
What is mass termination?
Under s. 58(1) of the Employment Standards Act, 2000 (the “ESA”), a “mass termination” occurs when the employment of 50 or more employees is terminated at an employer’s “establishment” within any four-week period.
Enhanced statutory notice
Normally, notice of termination under the ESA is one (1) week per year of service up to a maximum of eight (8) weeks. However, if a mass termination occurs an employer must provide increased statutory notice of termination that is based on the number of employees being dismissed, rather than the length of the employees’ service. According to s. 3(1) of O. Reg 288/01, employees must receive:
- Eight (8) weeks’ notice if the employment of 50 to 199 employees is to be terminated
- Twelve (12) weeks’ notice if the employment of 200 to 499 employees is to be terminated
- Sixteen (16) weeks’ notice if the employment of 500 or more employees is to be terminated
In Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469, the Court of Appeal emphasized that written working notice must be clear, unambiguous, and must provide the final date of termination.
An employer must also give notice to the Ministry of Labour (through the Director of Employment Standards) by its prescribed Form 1, on the first day of the statutory notice period. If the form is delivered late, the employer will lose credit for statutory working notice that is given before the form is delivered, which can have significant cost implications. If inadequate working notice is given, the balance of the statutory entitlement must be paid in lieu.
The Form 1 must also be posted in the workplace throughout the statutory notice period. (Note that posting of the form does not relieve the employer of the obligation to provide written notice of termination to each individual employee affected.) The Form 1 does not need to be completed in exhaustive detail, but every question must be answered.
Working after the initial termination date
The Court of Appeal in Wood v. CTS of Canada Co., 2018 ONCA 758 (CanLII) confirmed that statutory working notice will not be effective if the employees work more than 13 weeks beyond their original date of termination. Section 6(1) of O. Reg 288/01 allows employers to provide employees with temporary work up to 13 weeks after the termination date in the initial notice, without providing a new notice. However, this exemption only covers a single period of temporary work, not multiple extensions, in which case fresh notice is needed.
Other severance costs
The enhanced ESA notice entitlement is only the statutory minimum. Employees may also assert a right to contractual or common law notice, depending on the terms of their contracts of employment.
In addition to the statutory notice entitlement, employees also receive any applicable statutory severance pay amount owed to employees with at least five (5) years of service under s. 64 of the ESA.
Employees who have already received statutory working notice as part of a mass termination and wish to resign before the termination date indicated must give either one (1) week’s written notice of resignation if the employee has less than two (2) years of service, and two (2) weeks’ notice if the employee has at least two (2) years of service. Employers are not required to pay resigning employees for the balance of the working notice period.
Note that the mass termination obligations do not apply if two (2) strict conditions are met:
- The number of employees whose employment is being terminated is not more than ten (10) per cent of the total population of employees who have been working at the establishment for at least three (3) months; and
- None of the terminations are the result of a permanent discontinuance of all or part of the employer’s business at the establishment.
The case law in Ontario is replete with examples of pitfalls employers may face for noncompliance with the mass termination provisions of the ESA. If employers are faced with a mass termination situation they should take care to comply with the ESA in order to avoid significant financial consequences.