Form And Substance: Mass Termination And Working Notice Requirements Clarified By Ontario Court Of Appeal

A number of high profile store and plant closure announcements have put the spotlight on challenges gripping the retail and manufacturing sectors in Canada and abroad. When making closure and relocation decisions, it is critical for businesses operating in Canada to consider the employment obligations and liabilities that arise in "mass termination" scenarios.

Employment standards statutes in each Canadian jurisdiction contain special provisions for minimum termination notice or pay in lieu thereof, which apply when a prescribed number of employees will be terminated within a particular timeframe. In Ontario, for instance, the group termination requirements of the Employment Standards Act, 2000 (the "ESA"), are triggered "if the employer terminates the employment of 50 or more employees at the employer's establishment in the same four-week period."

Group termination provisions generally require an employer to provide the affected employees with enhanced notice of termination. In contrast to individual terminations, where statutory termination notice entitlements are based on employees' lengths of service, group termination notice entitlements are not based on seniority. Instead, employees severed as part of a mass termination must be provided with the same amount of termination notice, the quantum of which depends on the number of employees who will be terminated in the prescribed period. For example, in Ontario, employers must provide 8 weeks' notice to each employee when 50 to 199 employees will be terminated in a four-week period, 12 weeks' notice for 200-499 employees, and 16 weeks' notice when 500 or more employees will be terminated in a given four-week period.

In addition to providing employees with enhanced notice of termination, businesses facing a mass termination event must also give notice to government authorities in the manner and form prescribed by the applicable employment standards legislation. The ESA requires this "Form 1" notice to be delivered to the Ontario Ministry of Labour's Director of Employment Standards and provides that such notice "shall be deemed not to have been given until the Director receives the information required..."

Thankfully, a recent Ontario Court of Appeal decision has clarified the operation of the ESA's mass termination provisions, and particularly the consequences of an employer's late delivery of the required Form 1 notice to the Director of Employment Standards. Wood v. CTS of Canada Co...