The big cuts

There are strict and increased obligations for employers in mass terminations

The big cuts

There’s strength in numbers. Particularly for employees when it comes to termination of employment.

One of the fundamental elements of Canadian employment law is notice of termination in the event of without-cause dismissals. Employment standards legislation sets out the statutory minimums employers must provide for notice, while common law reasonable notice applies in many cases. It can be a lot for employers to keep track of, but things can get more complicated for employers planning on dismissing a large group of employees at the same time.

Each jurisdiction in Canada has its own specific rules, but they are all similar in that they require a certain amount of notice for mass terminations that’s larger than the statutory minimums for single terminations. For example, in Ontario the termination of 50 to 199 employees requires eight weeks’ notice, 200 to 499 employees requires 12 weeks’ notice, and 500 or more employees at least 16 weeks’ notice. Most provinces have a similar regime – with the exception of Prince Edward Island, which has no legislative requirements for mass terminations – with 16 weeks usually the minimum notice requirement for the largest terminations.

There can be many reasons for mass terminations, but a common one is a drop in business due to an economic downturn. BlackBerry, for example, was so successful in the early 2000s, but 10 years ago it had to cut about 40 per cent of its workforce, amounting to close to 5,000 employees. Despite its financial struggles, it was still subject to the rules around mass terminations along with the practical and administrative demands on HR that dismissing so many people required.

A wrinkle to the rules in Ontario has come up recently, as they specify that an applicable mass termination involves a number of employees terminated “at an employer’s establishment.” Technically, this would exclude remote employees, who are not at the employer’s establishment.

Of course, this raises concerns for many, as employers overall have many more remote employees than they used to. In recognition of this, the Ontario government is proposing updates to the province’s employment standards legislation that would ensure that remote employees would receive the same enhanced notice as employees who work on the employer’s premises in the event of a mass termination.

The proposed changes in Ontario make sense, as mass terminations are treated seriously and the rules are in place to help protect workers in such circumstances. Given the transition of the workforce to more remote work, a larger number of people would be exposed to being taken advantage of – like what happened at Twitter when Elon Musk took over. No one really wants mass terminations, so measures like this may help avoid them.

Whatever the rules may be in their jurisdiction, employers implementing mass terminations have to follow them carefully. Mass terminations affect many people and they can involve many moving parts.

Take, for example, a few years ago when an Ontario employer advised 77 employees that it would be closing its plant. The employer provided written notice in April 2014 that the plant would close in March 2015. The closure was pushed back to June 2015, providing well over a year of notice. However, the employer didn’t submit the official form outlining the mass termination to the Ministry of Labour until May 2015. The employees filed a class-action suit arguing that the working notice before the form was submitted shouldn’t count. The court agreed, finding that the statutory notice period doesn’t start until the Ministry of Labour is notified of the mass termination.

Mass terminations are often the result of difficult circumstances and, while not always a last resort, they can be the result of a tough decision. They also require extra homework and attention to detail for employers and their HR departments. The employment relationship can have an imbalance of power in favour of the employer, but if a large number of employees are involved in a termination, that balance can shift a bit and employers have stricter rules to follow.

Latest stories