Staying open past an announced plant closure date

Contract status of employees working beyond filed closure date

Tim Mitchell
Question: Our unionized plant is planned to close on Dec. 31, 2008, and employees will be offered a package. The contract with the union ends in July 2010. There is a possibility the plant could stay open longer and some jobs would remain while it stays open. Can a company file for plant closure and stay open after the closure date and would a new contract have to be negotiated for the period it remains open?

Answer: Employment standards legislation and regulations deal with the employment aspects of plant closures in some way in almost all of the Canadian provinces and in the federal jurisdiction. The legislation varies considerably from jurisdiction to jurisdiction.

Typically, an employer is required to give advance written notice of termination or intended termination to the employees who will be affected by the closure and any union representing them. Most statutes also require that notice be given to government representatives. In several jurisdictions, joint planning committees may — or must, in the case of employees governed by the Canada Labour Code — be established to address the impending terminations. The legislation often specifies the content of the required notices and details circumstances under which an employer may be exempt from giving notice. Some statutes permit pay to be given in lieu of notice; others do not. Many prohibit changes in wages and other employment terms and conditions during the notice period.

In most cases, the provisions are triggered by a “group termination” or “mass termination” of a specified number of employees within a specified period. In some statutes, different provisions apply depending on the magnitude of the termination, with more notice being required as the number of terminated employees increases. Statutory provisions that apply in the case of mass terminations impose additional obligations on an employer. They do not supercede collective agreement or statutory obligations in relation to termination of individual employees.

Subject to any specific plant closure provision in the existing collective agreement at a unionized plant and assuming the plant closure falls within a legislation scheme applying to mass terminations, the effect of continuing operations past the date specified in a notice of mass termination may also be expressly determined by legislation. In some jurisdictions, continuation of employment after the date specified in a mass termination notice voids the notice. In those jurisdictions, a new notice of termination would be required.

In general, as long as there are employees in the bargaining unit represented by the union and the union remains certified as the bargaining agent for those employees, the employer remains under an obligation to treat the union as the bargaining agent for the employees. This does not mean the company and the union will necessarily negotiate a new collective agreement without regard to an impending plant closure. It does mean the company must continue to recognize the union’s status as the entity representing the employees in negotiating employment terms and conditions. However, specific legislation may alter the obligations of both parties.

For example, Canada Labour Code provisions relating to group terminations mandate the establishment of a joint planning committee, dictate the composition of that committee, specify its objective — to develop an adjustment program to eliminate the necessity for the termination of employment or minimize its impact on the redundant employees and assist them in obtaining other employment — and compel the employer and any trade union to co-operate in developing the adjustment program. The code also provides for appointment of an arbitrator to assist in the development of an adjustment program and to resolve any matters in dispute respecting the program.

As the specific application and content of the standards vary considerably from jurisdiction to jurisdiction, it is crucial to consult relevant legislation to determine what the company’s obligations may be in each particular case.

Tim Mitchell is a partner with Laird Armstrong in Calgary who practices employment and labour law. He can be reached at t.mitchell@lairdarmstrong.com or (403) 233-0050.

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