List of Rules Which Apply to Ontario Employers in Cases of Mass Termination
Pursuant to section 58(1) of the Employment Standards Act, 2000 (“ESA”), a mass termination occurs when an employer terminates 50 or more employees at the employer’s establishment in the same four-week period. It is important to provide termination notice to avoid wrongful dismissal. However, this does not apply to a temporary layoff in Ontario due to the Covid-19 pandemic.
a. Notice to Director of Employment Standards
Employers must submit Form 1 (Notice of Termination of Employment) to the Director of Employment Standards. Notice of mass termination will not be effective until the Director receives the Form 1.
b. Notice of Termination or Pay in Lieu of Notice
In addition to posting Form 1 in the workplace, employers must provide each employee with individual notices of termination or pay in lieu of notice. Termination pay can be provided as a lump sum payment, which is equal to the employee’s regular wages for a regular work week, including a portion of unused vacation days.
c. Severance Pay
Employers must provide their employees with statutory severance pay if they are entitled to it. When an employer has a payroll in Ontario of at least $2.5 million, employees with at least five (5) years of service are entitled to severance pay.
However, where employees with five or more years of service are dismissed en masse due to permanent discontinuance of business, they are still entitled to severance pay even if their employer does not have a payroll of 2.5 million or more.
d. Notice Period Requirements
In mass termination, employers must abide by enhanced ESA notice requirements. In addition to statutory entitlements, employees may also assert a right to contractual or common law notice upon their termination of employment, which depends on the termination provisions of their employment contract. Employees who refuse an offer of reasonable alternative employment may be exempt from receiving notice of termination or termination pay under the ESA.
Enhanced Statutory Notice Period
In mass termination, employers must provide affected employees with enhanced statutory notice of termination, which is determined by the number of employees being terminated rather than the length of each employee’s service. Employers must provide:
- Eight (8) weeks’ notice if 50 to 199 employees are terminated;
- Twelve (12) weeks’ notice if 200 to 499 employees are terminated;
- Sixteen (16) weeks’ notice if 500 or more employees are terminated.
Form 1
The Form 1 (Notice of Termination of Employment) must be given to the Director of Employment Standards on the first day of the statutory notice period. Late delivery of the Form 1 notice will cause the employer to lose credit for statutory working notice given before the Form 1 is delivered. Despite that the Form 1 must be posted in the workplace throughout the statutory notice period, the employer still has the obligation provide each individual employee with written notice of termination.
Working After the Initial Termination Date
Employers are allowed to provide temporary work to employees without providing a further notice of termination, if this temporary work is within 13 weeks after termination date specified in the original notice. This exemption only applies to a single period of temporary work, not multiple extensions. A fresh notice is needed if temporary work exceeds 13 weeks post termination.
Resignations
In mass termination, if employees have already received statutory working notice but want to resign before the termination date, they must give
- One (1) week’s notice if the employee has less than two (2) years of service;
- Two (2) weeks’ notice if the employee has at least two (2) years of service.
Once an employee resigns, they are not entitled to pay in lieu of the balance of working notice.
Exceptions
The mass termination provisions do not apply if
- The number of employees whose employment is being terminated is 10 percent or less of the employees who have been employed for at least 3 months at the establishment; severance pay applies to employees who have been employed with the same employer for a specific duration;
and
- None of the terminations are caused by the permanent discontinuance of all or part of the employer’s business at the establishment.
Failure to abide by the minimum requirements for these termination provisions under the ESA can incur significant financial consequences for an employer. If you are an employee who is mass terminated, it is also advisable to seek the legal advice of an employment lawyer. No matter you are an employer or employee, top Toronto employment lawyer, Stacey Ball can help you determine your legal options. Please call us at 416-921-7997, extension 225. Such an employee might be owed more even after a working notice period has ended.