Terminated by tweet: Are mass layoffs on the rise?

Reports of employees finding out they have been fired by email or being locked out of their work accounts may sound like something from a dystopian nightmare. However, in light of the prevailing economic conditions, multiple tech companies have begun discarding employees by the truckload, changing the employment landscape in the process.

While corporate restructuring is sometimes needed to stay competitive, the recent mass terminations at Twitter in the US, for example, have garnered public attention and raised the ire of commentators worldwide. Many are left wondering whether such events could also play out north of the border.

Mass terminations at Twitter

After a long summer of “Will he or won’t he?” Elon Musk finally acquired social media site Twitter in October 2022. From the perspective of the company’s employees, carnage almost immediately ensued.

A few days following the acquisition, Twitter laid off a substantial portion of its workforce. The company claimed that this was necessary to reduce costs and address the social network’s urgent financial challenges.

According to reports, some employees were informed by email that they had been fired. Others found out when they could not access their work accounts. Twitter offices were closed for a period. Lawsuits swiftly followed, including a class action in California alleging that Twitter had violated federal and state legislation requiring advanced notification for mass terminations at businesses of a certain size.

Those employees that survived the cull were reportedly greeted with an email ultimatum – stay on and work long hours or leave. Employees were given only days to consider, and many resigned in response.

The Ontario Court of Appeal clarified that employers only have to post the notice of termination at the beginning of the statutory notice period, not before working notice is provided.

Employees working remotely shown the door

Decisions by tech companies to dismiss workers can have a significant impact across borders. According to reports, a few hundred people in Canada work for Twitter, and some of those were included in the mass terminations.

Those working in Canada are ordinarily covered by Canadian employment laws. For example, if an employee’s work is to be performed in Ontario, they are covered by that province’s Employment Standards Act, 2000 (ESA) – unless an exception applies, such as for federally regulated employees. This is vital because this legislation provides certain rights and protections to employees, including reasonable notice in the event of termination.

An Ontario company who fired a worker after a sexual harassment complaint had to pay $85,000 in moral and human rights damages in addition to pay in lieu of notice.

Bad faith in manner of dismissal

This year has also seen a string of decisions from Ontario courts imposing aggravated damages for bad faith terminations. Under Canadian law, such damages may be awarded if the employer does not comply with the duty of good faith in the manner of an employee’s dismissal. If the employer is untruthful, misleading, or even unduly insensitive, they could be on the hook for additional money. In one recent decision – Pohl v. Hudson’s Bay Company, 2022 ONSC 5230 – an employer was penalized by the Ontario Superior Court for marching an employee out the front door of the employer’s premises despite no allegations of misconduct.

It certainly appears, now more than ever, that employers must take care when terminating employees as courts are ready to scrutinize their conduct.

Dismissal itself is not unfair, but unfairness or bad faith in the manner of dismissal can warrant aggravated damages, writes an employment lawyer.

Special rules for mass terminations

But what about mass terminations of Canadian employees? Under the Ontario ESA, for example, special rules apply to mass terminations, which are defined as the termination of 50 or more employees at the employer’s establishment in a four-week period.

When the rules apply, the employer must submit a form to the Director of Employment Standards at the provincial Ministry of Labour containing information about the economic circumstances surrounding the terminations. The form also needs to be posted in the workplace in a visible location. Once completed, the employer can begin providing notice of termination to its employees.

There are some exceptions. For example, the rules do not apply when the number of employees dismissed is not more than 10 per cent of the number of employees employed for at least three months, and none of the terminations are caused by the permanent discontinuance of part of the business.

A worker being upset about losing their job isn’t enough to warrant aggravated damages, says an employment lawyer.

Notice periods increase

The rules for mass terminations in Ontario require extended statutory notice periods that are based on the number of employees that have been terminated rather than the length of the employee’s employment (as is the case for non-mass terminations). The ESA requires eight weeks’ notice when 50 to 199 employees are to be terminated. This jumps to 12 weeks if 200 to 499 employees are let go and 16 weeks for 500 or more employees.

Employees may be entitled to more at common law than what is offered by the employer in any severance package. For example, employers may not be able to unilaterally change the terms of an employment contract relating to hours of work. If an amendment diminishes the employee’s rights but does not provide anything of value in return, it may be invalid at law. If an employee resigns after their employer has altered a fundamental aspect of their employment relationship or created a toxic or poisoned working environment, they may have a claim for constructive dismissal.

As employees may be entitled to longer notice periods during a mass termination in addition to their regular rights, employers must be particularly cautious. While embarking on a mass termination is one method to weather an economic downturn, it should be done in a considered and planned way with due regard to applicable employment laws.

Paulette Haynes is the founder and managing officer of Haynes Law Firm, a Toronto-based employment law boutique.