In Ontario, layoffs in unionized workplaces are governed by collective agreements and employment laws. Employers must understand their legal obligations and the risks associated with unionized layoffs to avoid costly disputes. This article explores key aspects of layoffs in a unionized setting, including termination pay, bumping rights, recall rights, and dispute resolution.

Understanding Layoffs in Unionized Workplaces

Layoffs in unionized workplaces are primarily governed by collective agreements, which outline layoff procedures, recall rights, and severance entitlements. Unlike in non-unionized workplaces, where the Employment Standards Act, 2000 (ESA) dictates minimum entitlements, unionized employees rely on their collective agreements and the grievance/arbitration process to resolve disputes. Employers must strictly adhere to the terms negotiated in the collective agreement to prevent grievances.

Employer Obligations: Termination Pay vs. Severance Pay

A common misconception is that termination pay and severance pay are the same. Under Ontario’s ESA:

• Termination Pay: Required when an employer fails to provide the notice of termination mandated by the collective agreement or the ESA.

• Severance Pay: Applies only if the employer meets the ESA criteria, such as having a payroll of $2.5 million or more or terminating 50 or more employees within a six-month period.

Employers must comply with both the ESA and the terms outlined in the collective agreement when determining compensation owed to laid-off employees to mitigate the risk of legal action.

Bumping Rights: Are They Mandatory?

Bumping rights allow senior employees to replace less senior workers when layoffs occur. However, these rights are not automatic and only exist if they are included in the collective agreement. Employers should review the agreement carefully to determine how bumping rights apply and whether they impact workforce restructuring plans.

Managing Recall Rights Effectively

Many collective agreements grant recall rights, allowing laid-off employees to return to work when positions become available. However, recall rights are not mandated by law and depend entirely on the terms negotiated with the union. Employers should ensure compliance with recall provisions to avoid grievances that could result in costly arbitration proceedings.

Permanent Layoffs: Compliance and Risk Management

If a layoff is deemed permanent, severance pay under the ESA may be triggered, provided the employer meets the eligibility criteria. However, some collective agreements provide additional protections, including extended notice periods or enhanced severance terms. Employers must assess these obligations carefully to avoid legal disputes and financial liabilities.

Handling Disputes: The Grievance and Arbitration Process

Unionized employees who challenge a layoff must follow the grievance and arbitration process. Unlike non-unionized employees, who can file wrongful dismissal claims in court, unionized workers must resolve disputes through their union. Employers must be prepared to manage arbitration proceedings and ensure compliance with collective agreements to defend against grievances.

Legal Guidance for Employers

Layoffs in unionized settings require careful planning and legal compliance. Missteps can result in costly arbitration, reputational damage, and financial liabilities. Employers should seek legal advice to ensure layoffs comply with collective agreements and labour laws, reducing the risk of disputes.

Contact Achkar Law for Employer-Focused Legal Support

If your organization is planning layoffs or facing a dispute with a union, the labour law team at Achkar Law provides strategic legal solutions to help mitigate risks and ensure compliance with Ontario’s labour laws.