As the calendar has turned to 2023, it seems that the daily news cycle has been dominated by different companies announcing widespread reductions in their workforces. January is historically the worst month for layoffs.And a recent acceleration in mass terminations that have left thousands of Canadians newly unemployed has made clear that this trend is not stopping anytime soon. While many of the noteworthy layoffs of late have been those in the technology space, employers and employees across a variety of sectors are recognizing that no industry can ignore this reality, particularly as concerns about a possible recession loom.
Leaving aside the old adage “it’s not personal, it’s just business,” the reality is employment is deeply personal, and the abrupt termination of one’s employment will undoubtedly impact both their personal and professional livelihoods. Therefore, if any reader of this post finds themselves in the unfortunate position of being part of a mass termination, it is imperative that they ensure that all of their legal rights have been met. This blog is intended to provide general information only and does not constitute legal advice. Readers are advised to seek specific legal advice about their situation.
The Employment Standards Act
The rights of most employees in Ontario are governed by the Employment Standards Act, 2000 (ESA).[1] The ESA outlines minimum standards that employees in Ontario must be provided by their employer. Although contracts between employers and employees will necessarily differ according to the specific circumstances of one’s employment, an Ontario worker’s employment contract must provide at least the minimums outlined in the ESA. An employment contract that provides for anything less than the ESA minimum standards will be void and unenforceable. The ESA applies to most Ontario employees working in Ontario, even if their employer is based outside of Ontario or Canada. For example, an Ontario resident who works at home for a large technology company headquartered in Silicon Valley is likely entitled to the rights guaranteed by the ESA.
Under the ESA, terminated full-time employees are entitled to a minimum amount of working notice, though many employers typically elect to provide pay in lieu of working notice. For example, the ESA mandates that a worker that has been employed for over one year but less than three years is entitled to two weeks’ working notice, though an employer will likely elect to provide two weeks’ pay instead. An employment contract can provide for more, but not less, than the ESA minimums. Workers who have been employed for over five years and meet certain other criteria are also entitled to severance pay in addition to notice, which is calculated at one week per year of employment, up to 26 weeks.
Mass Termination
Employees who are part of a mass termination are subject to additional notice obligations under the ESA that can extend far beyond the minimum notice they would otherwise be owed. According to the ESA, a mass termination occurs when an employer terminates 50 or more employees within any four-week period. A mass termination may not be limited by any particular geographical location – as long as an employer terminates 50 or more employees collectively at any of its locations, the additional obligations can be triggered. The amount of notice, or pay in lieu of notice, owed to employees in a mass termination will be determined by the exact number terminated:
- 50 to 199 employees terminated – 8 weeks
- 200 to 499 employees terminated – 12 weeks
- 500+ terminated – 16 weeks
The mass termination obligations will not apply if the number of terminated employees represents 10% or less of the company’s employees who have been employed for at least 3 months and if the terminations were not caused by the permanent discontinuance of all or part of the company’s business at the particular establishment. An employer engaging in a mass termination will also have to file a Form 1 with the Ontario Ministry of Labour’s Director of Employment Standards in order to properly commence the notice period.
There have been many instances where an employer terminating a large portion of its workforce will be unaware of its specific obligations as part of a mass termination. Unfortunately, there are also situations where an employer expects that employees will be unaware of their entitlements and will provide them with a termination offer that is significantly less than the ESA minimums. In the event that you are facing termination from your employer, it is important to remember that the ESA provides you with minimum standards that every employment contract must meet. The fact that you cannot contract out of the ESA means that even if you sign a termination offer or a release, the offer may be void if it provides you with less than the ESA minimums.
We recommend that any worker facing termination, whether or not it is part of a mass termination, obtain independent legal advice before signing any document. Similarly, an employer that anticipates undergoing a mass termination should seek legal advice to determine the extent of their obligations.
[1] SO 2000, c 41.
