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In a volatile global economy, it is sometimes necessary for organizations to restructure their operations in order to remain competitive. Often, this “right-sizing” exercise involves the termination of groups of employees, or even entire departments or business units. Canada has been no stranger to job loss over the past five years and, indeed, talk of corporate restructuring and mass terminations have remained front-page news as recently as this week, with Waterloo, Ontario-based BlackBerry (formerly Research In Motion) announcing that it would be cutting an additional 100 jobs as part of the second phase of its transformation plan.
While restructuring allows the company to become more competitive, it often has adverse consequences for those employees who are terminated. For this reason, the Ontario legislature has intervened, prescribing minimum statutory entitlements for all employees in the event of a “mass termination”, pursuant to the Employment Standards Act, 2000 (the “ESA”). These entitlements are supplemented by a body of case law that has been decided by Ontario courts, often referred to simply as “the common law”.
The purpose of the ESA and the common law is to provide employees with reasonable notice of the termination of their employment, so that the terminated employee has an opportunity to begin to search for (and potentially secure) alternate employment before experiencing a wage loss. The termination provisions of the employment contract, if any, will determine whether the terminated employee will receive statutory or common law entitlements.
Employer Obligations and Employee Entitlements
In Ontario, a “mass termination” is any termination in which 50 or more employees are terminated within the same four-week period. Unlike an ordinary termination scenario, where each employee’s statutory entitlements would vary depending on their years of service, a “mass termination” scenario provides all terminated employees with equivalent statutory notice entitlements.
The following chart is intended to provide employers and employees alike with a summary of their legal obligations and entitlements, with the goal of helping workplace parties to better understand the mass termination process.
In addition to these notice, severance and benefit provisions, the Employment Standards Act, 2000 contains several rules that Ontario employers must follow when effecting a “mass termination”:
- Provide a Director of Employment Standards with relevant information regarding the mass termination, including the location(s) affected by the termination, the number of employees to be terminated, the dates upon which the terminations will become effective, the economic circumstances surrounding the termination, and the contact information for an employer representative.
- Post the information provided to a Director of Employment Standards in the workplace on the first day of the notice period, and keep the information posted throughout the notice period.
As one might imagine, there are numerous caveats to these general rules. Furthermore, each employment situation is unique and, therefore, each termination will result in slightly different entitlements for the terminated employee. For these reasons, we recommend that workplace parties involved in the mass termination process seek the advice of an employment lawyer before commencing the mass termination process, and before accepting a severance offer.
Ryan D. Campbell