Understanding Mass Layoff in Ontario: Rules and Guidance
Every week we are seeing articles about mass layoffs happening at home and abroad. This economic trend highlights the importance of understanding the rules and processes involved in mass layoffs in Ontario.
Mass layoffs are complicated and deeply stressful times for both employers and employees. Unlike individual terminations, special rules apply when dealing with a mass layoff. In Ontario, employers must ensure they follow the appropriate steps and guidelines in compliance with the Employment Standards Act, 2000 (“ESA”).
You may be wondering:
- What are the special rules applying to mass layoffs?
- How much severance is owed to employees in a mass layoff?
- How can an employment lawyer help you in a mass layoff?
This article will answer these questions and provide an overview of the mass layoff process.
Special Rules for Mass Layoffs
In Ontario, the ESA outlines the employee’s minimum termination entitlements. Special rules apply under the ESA when 50 or more employees are terminated from a company within a 4-week period. If an employer knows a mass layoff is imminent, they must take specific steps in advance.
Steps Ahead of a Mass Layoff:
- Submit Form 1: An employer must submit a Form 1 (Notice of Termination of Employment) to the Director of Employment Standards before giving notice to the affected employees. The Director must provide the employer with a confirmation of receipt.
- Provide Notice: Once Form 1 is submitted, the employer must provide individual notices of termination to the impacted employees and post the Form 1 in a visible area on the first day of the notice period.
Required Notice Period Based on Number of Employees
- 8 weeks’ notice if 50 to 199 employees are to be terminated
- 12 weeks’ notice if 200 to 499 employees are to be terminated
- 16 weeks’ notice if 500 or more employees are to be terminated
Severance Pay in a Mass Layoff
In addition to termination notice, employees may be eligible for statutory severance pay under the ESA if they:
- Have been with the employer for 5 years or more
- Are one of 50 or more employees who have their employment severed within a 6-month period
- Work for an employer with a payroll of $2.5 million or more
Statutory severance pay entitles an employee to an additional 1 week of pay per year of service, up to a maximum of 26 weeks of regular wages.
Common Law Reasonable Notice: If an employment agreement does not have an enforceable termination clause, an employee may be entitled to common law reasonable notice. Courts determine reasonable notice based on several factors, including:
- Employee’s age
- Years of service
- Seniority and character of employment
- Compensation
- State of the economic and labour market
- Any other factor that may influence how long it may take the employee to find a comparable job
Common law reasonable notice can exceed 24 months’ pay and includes all forms of compensation and benefits, such as salary, bonus, commissions, pension contributions, and health and dental benefits.
How Can an Employment Lawyer Help?
Mass layoffs can be stressful for both employees and employers. Employers who fail to provide the minimum entitlements under the ESA or at common law risk legal claims through the Ontario Ministry of Labour or a wrongful dismissal lawsuit.
For Employers:
- Ensure compliance with all protocols and procedures during a mass layoff
- Provide legal advice to minimize legal risks
- Negotiate with employees to avoid common law reasonable notice lawsuits
- Draft settlement documents to protect against future legal actions
- Navigate legal proceedings if an employee commences action for termination entitlements
For Employees:
- Understand your rights and options
- Negotiate a fair severance package
- Pursue legal action if necessary
Don’t let a mass layoff leave you feeling helpless and uncertain about your future. Contact a lawyer today to help you through this difficult time and protect your legal rights.
Conclusion
If 50 or more employees are terminated from an employer within a 4-week period, the company may be facing a mass layoff. Special rules apply during mass layoffs, and there may be additional responsibilities for employers under the ESA. The notice of termination differs depending on the number of employees laid off. ESA rules defining severance pay may also apply. Employers may owe employees more than the minimum entitlements under the ESA if their employment agreements do not contain enforceable termination clauses.
Contact Achkar Law for Assistance with Mass Layoffs
Mass layoffs can be complex and stressful for both employers and employees. Ensuring compliance with all legal requirements is crucial to avoid potential legal claims and financial liabilities. Achkar Law’s experienced employment lawyers are here to help you through this challenging time.
Whether you are an employer needing guidance on complying with ESA regulations and minimizing legal risks, or an employee unsure about your rights and entitlements, we provide tailored legal advice and representation to ensure fair treatment and protection of your rights.
Contact Achkar Law today for a consultation and let us assist you with your mass layoff concerns.
Call us toll-free: 1 (800) 771-7882 | email us: [email protected]
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