Canada: COVID-19 And Relief From Mass Termination Rules

Canadian businesses have suffered severe financial distress due to COVID-19. Many employers have been forced to lay off their employees hoping they would only be required to do so temporarily. It has become clear that the statutory periods for temporary layoffs have not provided many employers with adequate time to weather the storm. By necessity, some employers must now look beyond temporary layoffs to the implementation of a mass/group termination in order to survive the catastrophic financial impact of the pandemic.

In a previous Insight, we provided a detailed review of the legislative requirements and time periods for temporary layoffs in Canada, including information about any relief from those requirements that has been made available to employers during COVID-19. In this Insight, we provide a review of the legislative requirements and time periods for mass/group terminations in the Canadian common law provinces (i.e., we do not review Quebec) and pursuant to the Canada Labour Code, including information about any relief from those requirements that may be available. Beyond statutory requirements, an employer may also have common law or contractual obligations.

Mass/Group Terminations

In Canada, employment standards legislation generally requires employers to provide a notice period of substantial length before a mass termination is effective. This requirement may be fatal to a business that has experienced significant revenue reductions. Employees remain on the payroll during the notice period, often causing businesses to sink deeper into financial distress. Examples of businesses that have experienced significant revenue reductions due to COVID-19 include the retail, restaurant, airline, hotel, and car rental industries, and many within these industries will undoubtedly be forced to implement mass terminations.

Set out below is our province-by-province and federal summary.

Ontario

Legislative requirements for mass terminations

In Ontario, despite the individual written notice of termination that an employer is required to give upon terminating the employment of an employee who has been continuously employed for three months or more, an employer is required to give notice of termination if it terminates the employment of 50 or more employees at the employer's establishment in the same four-week period.¹

An employer's establishment is a location at which the employer carries on business. If an employer carries on business at more than location, separate locations constitute one establishment if (a) the separate locations are located within the same municipality, or (b) one or more employees at a location have seniority rights that extend to the other location under a written employment contract, enabling the employee(s) to displace another employee of the same employer.²

The notice required depends on the number of employees affected:

The employer must provide the notice to the Director of Employment Standards in a form approved by the Director. The form approved for this purpose is entitled "Form 1." The following information must be included in the notice:

• Employer's name and mailing address.
• Locations where the employees whose employment is being terminated work.
• Number of employees working at each location who are paid
  
  • on an hourly basis,
  • on a salaried basis, and
  • on some other basis.
• Number of employees whose employment is being terminated at each location who are paid
  
  • on an hourly basis,
  • on a salaried basis, and
  • on some other basis.
• Dates on which it is anticipated that the employment will be terminated.
• Name of any union representing any employees whose employment is being terminated.
• Economic circumstances surrounding the terminations.
• Name, title and telephone number of the individual who completed the form.⁴

The information in the notice may also include:

• Any consultations that have been or are proposed to take place with communities in which the terminations will take place or with the affected employees or their agent in connection with the terminations;
• Any proposed adjustment measures and the number of employees expected to benefit from each; and
• A statistical profile of the affected employees.⁵

The notice of termination will be deemed not to have been given until the Director receives this information.⁶

On the first day of the notice period and throughout the notice period, the employer must post in the employer's establishment the prescribed information in a form approved by the Director, in at least one conspicuous place where it is likely to come to the attention of the affected employees.⁷ In addition, the notice must be given in writing, addressed to the employee who is being terminated, and served on the employee in accordance with requirements set out in the statute.⁸

During the group termination notice period, the employer:

• Must not reduce the wage rate or alter any other term or condition of employment;
• Must in each week pay the wages the employee is entitled to receive, which may not be less than their regular wages for a regular work week. (If the employee does not have a regular work week or if the employee is paid on a basis other than time, the employer must pay the employee an amount equal to the average amount of regular wages earned by the employee per week for the weeks in which the employee worked in the period of 12 weeks immediately preceding the day on which notice was given.); and
• Must continue to make whatever benefit plan contributions that are required to be made to maintain the employee's benefits under the plan until the end of the notice period.⁹

The employer must also pay minimum severance to terminated employees who were employed by the employer for five years or more where:

• The severance occurred because of a permanent discontinuance of all or part of the employer's business at an establishment and the employee is one of 50 or more employees who have their employment relationship severed within a six-month period as a result; or
• The employer has a payroll of $2.5 million or more.¹⁰

Variance or exemptions from mass termination requirements

Mass termination notice requirement will not apply if:

• The number of employees whose employment is terminated at the establishment is not more than 10% of the number of employees who have been employed there for at least three months; and
• The terminations were not caused by the permanent discontinuance of part of the employer's business at the establishment.¹¹

If this exception applies, the individual notice provisions will apply instead of the mass termination rules.

In addition, an employer may terminate the employment of an employee without notice or with less notice than is required under the group termination notice requirements if the employer:

• Pays termination pay to the employee in a lump sum equal to the amount the employee would have been entitled to receive had notice been given; and
• Continues to make the benefit plan contributions it is required to make to maintain the benefits the employee would have been entitled to had they continued to be employed during the notice period.¹²

Footnotes

1 Employment Standards Act, 2000, SO 2000, c 41 (Ontario ESA), s. 58(1).

2 Ontario ESA, s. 1(1).

3 Termination and Severance of Employment, O Reg 288/01 (Regulation 288/01), s. 3(1).

4 Regulation 288/01, s. 3(2).

5 Ontario ESA, s. 58(3).

6 Ontario ESA, ss. 58(2)(a), 58(4), Regulation 288/01, s. 3(2).

7 Ontario ESA, ss. 58(2)(b), 58(5).

8 Regulation 288/01, s. 4(1).

9 Ontario ESA, ss. 60(1), 60(2).

10 Ontario ESA, s. 64(1).

11 Regulation 288/01 (Regulation), s. 3 (4).

12 Ontario ESA, s. 61(1).

To view the full article please click here.

Originally published June 17, 2020.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.