Entitlements During Mass Termination
By: Sean O’Donnell
These blog posts are meant to provide educational content and are not to be taken as legal advice.
It seems these days you can hardly ever turn on the radio or visit a news website without hearing that a once-thriving company has declared bankruptcy, is moving, or is cutting back and needs to lay off workers. When a business in Canada is forced to make mass terminations, there are certain entitlements which are outlined for both employers and employees in the Ontario Employment Standards Act – 2000 (ESA).
Mass termination as defined by the ESA is when an employer terminates 50 or more employees from their establishment within a rolling four-week period. “Establishment” means one or more locations within the same municipality. The provisions for mass terminations do not apply when the terminations are less than 10 percent of employees who have worked at the company for at least three months and if those terminations were not caused by a permanent discontinuance of business operations.
Notice to the Director of Employment Standards
Prior to making mass terminations, an employer must submit a Form 1 Notice of Termination of Employment (Form 1) to the Director of Employment Standards. Termination cannot take effect until the Director receives this form.
Form 1 must include relevant information about the terminations including number of employees being terminated, dates and locations where terminations will occur, and economic reasons for the terminations.
Notice or Pay in Lieu of Notice
In addition to posting and providing Form 1, employers must also give employees notice of the termination or pay in lieu of notice. This will be determined by the number of employees who are being let go:
- 50-199 employees – Eight weeks’ notice or pay in lieu of notice.
- 200-499 employees – Twelve weeks’ notice or pay in lieu of notice.
- 500 or more employees – Sixteen weeks’ notice or pay in lieu of notice.
Employees who have been with the company for five years or more are also entitled to severance pay if there are mass terminations which occur because of a permanent discontinuance. This is true even if the employer has a payroll of less than $2.5 million.
Notice Period Requirements
Finally, the ESA also has general requirements which employers must abide by when they make mass terminations. This includes not changing any of the terms or conditions of employment (such as wages or benefits) during the notice period.
These statutory entitlements are supplemented by common law as well as case law which is decided by the courts. Together these serve to provide employees with reasonable notice of termination (of pay in lieu of termination) so that they can begin to look for employment elsewhere before they experience a loss of income.
Contact SJO Legal Today
If you are an employer preparing to make mass terminations and you need assistance to ensure you are complying with the ESA; or if you are an employee who feels that you were part of a mass termination that was improperly handled, contact SJO Legal today. We would be happy to review your situation and let you know how we can help.