Corporate restructuring is sometimes necessary to stay competitive in the global business landscape. Unfortunately, significant restructuring often involves the termination of large numbers of employees, otherwise known as a mass termination. Employers faced with making this decision must be aware of their obligations in order to avoid violating their employees’ rights under both the applicable legislation and the common law.
The employment lawyers at Sultan Lawyers have spent years advising both employees and employers on their rights and obligations respecting employment law. When faced with a mass termination, our lawyers will work with an employer to develop and implement a plan that protects the rights of the affected employees while mitigating risk for the employer.
As defined by the Ontario Employment Standards Act, a mass termination is the termination of 50 or more employees at one establishment over a four-week period. Termination generally requires adequate notice to the employee in order to prevent a valid claim for wrongful dismissal. However, there are additional requirements that apply specifically to instances of mass termination.
The statutory notice period for a mass termination is dependent on the number of employees affected:
In addition to providing adequate notice to the employees, employers are also required to submit notice to the Director of Employment Standards via a form known as Form 1. This form must be submitted to the Director at the start of the statutory notice period, and it must also be posted in the workplace where it is visible to the employees. If an employer fails to submit the form on time, it will have the effect of restarting the notice period owing to employees.
Recently, the Ontario Court of Appeal clarified the rules surrounding the Form 1 requirements, in a case called Wood v. CTS of Canada Co. (“Wood”). The Court of Appeal specified that the Form 1 notice was required to be submitted at the time of the statutory notice period only. Therefore, an employer is free to provide additional notice to employees but is not required to submit Form 1 until the start of the 8, 12 or 16-week period specified under the Employment Standards Act. Failure to do so will have the effect of restarting the statutory notice period for employees, but not any additional notice provided beyond that period.
The purpose of the notice period in any termination is to allow employees an opportunity to find alternative employment prior to becoming unemployed. In a mass termination, this is no different. In Wood, the Court clarified that employers would not be credited as having provided notice for any week in which employees were required to work additional hours as overtime, as this deprived them of time to look for new employment. Therefore, employers in a similar situation must be cautious to allow employees their free time during the notice period as well.
Further, the Court clarified that employers are permitted to offer terminated employees temporary work after the date of termination for up to 13 weeks. Beyond that period, employers are required to issue a fresh notice of termination and begin the process over again.
At Sultan Lawyers in Toronto, our forward-thinking and strategic employment lawyers regularly advise employers across the province on best practices and compliance with the law in carrying out a mass termination. We are relied upon by a wide range of Canadian and global companies to provide strategic advice, and, where necessary, a vigorous defence of our clients’ interest to ensure that they are protected. We help employers ensure that departing employees receive everything they are legally entitled to while managing an employer’s risk and limiting their liability. Contact us online or at 416-214-5111 for a consultation.
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