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

A recent decision of the Ontario Court of Appeal has clarified employers' notice obligations in the event of business closure, particularly with respect to mass termination notice requirements under the Employment Standards Act, 2000 (the "ESA") and "working notice" more broadly.

Wood v. CTS of Canada Co.1was a class action brought on behalf of 74 employees who were severed when CTS closed its Streetsville, Ontario, manufacturing plant. The former employees claimed that the termination notice CTS provided was invalid and inadequate for various reasons, such that they were entitled to additional pay in lieu of notice following the plant closure.

In September 2018, the Ontario Court of Appeal overturned significant parts of a 2017 summary judgment decision2 in which the Superior Court of Justice had found in favour of the severed employees. Employers should take note of the following issues determined by the Court of Appeal in Wood v. CTS of Canada Co.:

"Form 1" notice of mass termination required by the ESA must be given to the ESA Director on the first day of the statutory notice period. It does not need to be given before the commencement of the statutory notice period, even if the employer has chosen to give employees greater notice of termination, i.e. notice on some earlier date. Late delivery of the Form 1 notice disentitles an employer to credit for working notice between the start of the statutory notice period (the due date for the Form 1 notice to the ESA Director) and the date on which the Form 1 notice is actually received. However, late delivery does not render earlier notice of termination given to employees invalid or ineffective for all purposes. Extensions to a period of working notice may legally constitute fresh notices of termination which restart employees' notice periods and deny employers credit for working notice completed up to the date of the extension. Employers may not receive credit for working notice if exceptional demands or other workplace conditions interfere with the quality of an employee's opportunity to find new employment during the working notice period. It is hard to overstate the significance of these points for employers navigating a plant closure. Had the Court of Appeal not corrected the lower court's interpretation of the ESA mass termination provisions, it would have been arguable that Form 1 notice is required to start the clock running on employees' statutory and common law reasonable notice...