What Do Employers Owe Employees in a Mass Layoff?
Mass layoffs are complicated and deeply stressful times for both employers and employees. Unlike individual terminations, special rules may apply when dealing with a mass layoff. In Ontario, employers navigating a mass layoff 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 the above questions, and provide an overview of the mass layoff process.
What Are the Special Rules Applying to a Mass Layoff?
In Ontario, the ESA outlines the employee’s minimum termination entitlements. Where an employer triggers a mass layoff under the ESA, special rules apply that may impact an employee’s termination entitlements.
Subject to some exceptions, a mass layoff occurs under the ESA when 50 or more employees are terminated from a company within a 4 week period. If an employer knows that a mass layoff is imminent, then they must take a few steps ahead of time.
Ahead of a mass layoff, an employer must submit a Form 1 (Notice of Termination of Employment) to the Director of Employment Standards. This form must be submitted prior to giving notice to the impacted employees, and the Director of Employment Standards must provide the employer a confirmation of receipt.
Once the employer provides the Director of Employment Standards the Form 1, the employer must then provide individual notices of termination to impacted employees and also post the Form 1 in an area where it comes to the attention of the employees on the first day of the notice period.
The required notice period is based on the number of employees affected by the mass layoff. For instance, an employer must give:
- 8 weeks’ notice if 50 to 199 employees are to be terminated;
- 12 weeks’ notice if 200 to 499 employees are to be terminated; and
- 16 weeks’ notice if 500 or more employees are to be terminated.
How Much Severance Do Employers Owe in a Mass Layoff?
In addition to termination notice, an employee’s rights to statutory severance pay may also be applicable. Under the ESA, the employee is eligible for statutory severance pay 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; and
- Their employer has a payroll of $2.5million 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.
However, if an employment agreement does not have an enforceable termination clause, an employee may be entitled to common law reasonable notice.
Common law reasonable notice is determined by Courts taking factors into account to determine how much reasonable notice or pay in lieu of notice an employer owes an employee. Factors can include, but are not limited to:
- An employee’s age;
- An employee’s years of service;
- An employee’s seniority and character of employment;
- An employee’s compensation;
- The current state of the economic and labour market; and
- Any other factor a Court may consider to determine how long it may take the employee to find a job comparable to the one an employer terminates them from.
Common law reasonable notice can include an employee’s entitlements under the ESA, but can be higher than 24 months’ pay. This would include all an employee’s compensation and benefits, including salary, bonus, commissions, pension contributions, and health and dental benefits.
How Can an Employment Lawyer Help You?
Mass layoffs can be a stressful situation for both employees and employers. Ontario employers who fail to provide employees their minimum entitlements under the ESA or at common law in any termination situation risk legal claims through the Ontario Ministry of Labour or a wrongful dismissal lawsuit at the Ontario Superior Court of Justice.
If you are an employer, a lawyer can help you:
- Follow all appropriate protocols and procedures in a mass layoff while providing sound legal advice to minimize legal risks
- Negotiate with employees who could otherwise sue for common law reasonable notice
- Ensure any settlement includes documents that properly protects them from any future lawsuit
- Navigate a legal proceeding an employee commences against them for their termination entitlements
No matter what approach you want to take, it is important for employers to consult with an employment lawyer to minimize their legal risks and maximize the chances of success in any legal proceeding.
If you are an employee, a lawyer can help you understand your rights and options, and can help you negotiate a fair severance package or 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 navigate through this difficult time and protect your legal rights.
If 50 or more employees are terminated from an employer within a 4 week period, then 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.
Specifically, the notice of termination differs depending on the number of employees laid off. The ESA rules defining severance pay may also apply. Employers may also owe employees more than just the minimum entitlements under the ESA if their employment agreements with employees do not contain enforceable termination clauses.
Contact Achkar Law
If you have any questions about mass layoff, our team of experienced employment and human rights lawyers at Achkar Law can help.