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Mass layoffs trigger special rules, obligations for employers – and rights for workers

Earlier this summer, TELUS announced that it would be eliminating 6,000 jobs. Several companies have made similar large scale downsizes to their workforces over the past couple of years. Shopify cut down their workforce by 20 per cent. Nordstrom closed all of its Canadian stores, terminating the employment of staff of those locations. Cineplex let go of 6,000 part-time workers across Ontario and Quebec.

In the face of such large-scale terminations, it is important for both employees and employers to be aware that there are special employment standards rules that apply to mass terminations.

What is a ‘mass’ or ‘group’ termination?

A “mass” or “group” termination is when a large number of employees are let go within a certain period of time. The exact number of employees and the exact time period of time are determined by the employment standards legislation of the applicable jurisdiction.

Many jurisdictions (Federal, Alberta, Manitoba, Newfoundland, and Ontario), consider a mass/group termination to be when at least 50 employees have been let go over a period of four weeks.

Other jurisdictions (New Brunswick, Nova Scotia, and Saskatchewan) consider it a mass/group termination if at least 10 employees have been let go over a period of four weeks.

Other thresholds for terminations over a period of time include:

• 50 terminations over 2 months (British Columbia);
• 25 terminations over 4 weeks (Northwest Territories, Nunavut, Yukon); and
• 10 terminations over 2 months (Quebec);

Prince Edward Island does not have specific rules for group terminations.

For some jurisdictions (Ontario and New Brunswick), there is an additional requirement that the terminations must also exceed a specific percentage (e.g. 10%) of the employer’s workforce before the special rules for mass/group terminations apply.

What ‘special rules’ apply?

Amount of Notice of Termination

When there has been a mass/group termination according to the employment standards legislation of the applicable jurisdiction, the amount of notice an employer must provide to the dismissed employees is different than in individual terminations.

For many jurisdictions, how much notice an employer is required to provide is determined by how many employees were let go. Often, this follows a pattern similar to:

• 8 weeks of notice for 50-100 terminations;
• 12 weeks of notice for 100-300 terminations;
• 16 weeks of notice for 300+ terminations.

There are some minor differences between jurisdictions that follow this pattern. For example, Alberta’s first category is for 50-99 terminations, while British Columbia’s is for 50-100.

There are also jurisdictions that do not follow this pattern:

• Federal: 16 weeks – does not change as the number of terminations increase.
• Manitoba: 10 weeks, 50-100 terminations/14 weeks, 101-300 terminations/18 weeks, 300+ terminations.
• New Brunswick: 6 weeks – does not change as the number of terminations increase.
• Saskatchewan: 4 weeks, 10-49 terminations/8 weeks, 50-99 terminations/12 weeks, 100+ terminations.

Required notice forms or information

Additionally, there are often specific forms, notices, and information (all of which are prescribed by the applicable employment standards legislation) that must be provided to the dismissed employees and to additional parties (such as specific government bodies and trade unions).

It is critical that employers properly complete and provide any forms, notices, or information that is required, as the failure to do so could greatly impact the timing of when the clock starts on the mass/group termination notice period, or the potential liability an employer may face for mass/group wrongful dismissal claims.

For example, under the Employment Standards Act (“ESA”) of Ontario, the notice for a mass termination is not effective until the Director of Employment Standards receives the completed Form 1 (Notice of Termination of Employment). If this Form is never completed, the employer would be deemed to have not provided notice, a consequence that could lead to significant wrongful dismissal liability.

Employee obligations

Employees may have obligations or restrictions on what they can do after receiving the mass/group termination notice.

For example, under the ESA in Ontario, employees are required to provide an employer with written notice of resignation (1 week if employed for under 2 years, 2 weeks if employed for 2+ years) if they decide to quit during the mass/group termination notice period. (In normal circumstances, there is no statutory requirement in the ESA for an employee to provide a specific amount of written notice of resignation).

Other jurisdictions may have other obligations imposed on employees in connection with a mass/group termination.

Lessons for employers

It is important for employers to keep track of all terminations that have occurred or will occur in the future. By keeping track of that information, employers can plan and act accordingly to comply with their legal obligations.

Employers may choose to delay or speed up a certain number of terminations to avoid hitting the mass/group termination threshold. If there is going to be a mass/group termination, or if the employer is uncertain whether they will hit that threshold, it is important to consult with a lawyer and ensure that the proper documents are prepared.

John Hyde is the managing partner at Hyde HR Law in Toronto. He advises management on all aspects of employment and labour law, including representation before administrative tribunals, collective agreement negotiation, arbitrations, wrongful dismissal defence and human rights.