Mass Terminations: Proposed Changes in Ontario, and What Employers Should Know

By: Elliot Saccucci and Student at Law Nefisa Ansong

With Covid-19 coming to an end, and businesses re-evaluating their internal structures, mass terminations are gaining more traction in the news cycle.

What is a Mass Termination?

In Ontario, according to the Employment Standards Act the “ESA” mass terminations apply when:

The employment of 50 or more employees is terminated at an employer’s “establishment”, in a four-week period.^[1]

When a mass termination occurs, employers have special obligations.

New Changes on the Horizon for Ontario

Employers in Ontario should be aware that the term “establishment” could change, because of proposed legislation Bill 79 the Working for Workers Act^[2]. Bill 79 was introduced in March 20th, 2023.

Bill 79 seeks to expand the definition to include:

A private residence of the employer’s employee if the employee performs work in a private residence and the employee does not perform work at any other location where the employer carries on business.^[3]

Currently the legislation considers an “establishment” to cover a location in which the employer:

Carries on business, including if they work in more than one location;
Separate locations constitute one establishment located in the same municipality; or
One or more locations has seniority rights that extend to the other location under a written employment contract.^[4]

As of May 8^th, 2023 Bill 79 has been ordered for its third reading. If it is passed as drafted, amendments to mass termination legislation will come into force on the date on which Bill 79 receives Royal Assent, which the Loopstra team will continue to monitor.

Current Considerations For Employers

Time Frame

Mass termination obligations can arise even if all terminations do not occur simultaneously. The time frame in Ontario is within 4 weeks and starts from the date of the first set of terminations. ^[5]

Temporary Layoffs

Once the threshold for a temporary layoff period is triggered (13 weeks in any consecutive 20-week period) the termination will be included in the count for the determination of a mass termination.^[6]

Notice Period

In Ontario, the notice period required for mass termination overrides individual notice periods and is the same for the group.

Notice periods correspond with the following breakdown:

50 to 199 employees: at least 8 weeks notice;
200 to 499 employees: at least 12 weeks notice; or
500 or more employees: at least 16 weeks notice.^[7]

Exceptions

There are exceptions where the mass termination rules do not apply. In Ontario mass termination rules do not apply if:

The number of employees whose employment is being terminated represents not more than 10% per cent of the employees who have been employed for at least three months at the establishment; and
None of the terminations are caused by the permanent discontinuance of all or part of the employer’s business at the establishment.^[8]

Employers’ Obligations

If a mass termination occurs in Ontario, employers have a duty to:

Submit a Form 1 (Notice of termination of employment) to the Director of Employment Standards on the first day of any notice period;
Put the Form 1 in a conspicuous place;^[9]
Keep the Form 1 posted during the notice period; and
Provide each affected employee with a letter copy of the group termination in advance of the termination.^{^[10]}

Without complying with these preliminary steps, a notice of termination is void. Failing to give the government the full length of required notice may invalidate any previously given termination notice.^[11]

Other Entitlements

Employers should consider individual employee entitlements and obligations even if they are engaging in a mass termination. For example, employers are permitted to provide employees with pay in lieu of the group termination notice.^[12]Employers must also be aware that an employee with five or more years of service may be owed a week of pay^{^[13]} of service up to 26 weeks^[14].

Working Notice: Be Aware!

Employers are entitled to provide work to an employee who has been given notice of termination on a temporary basis in the 13-week period after the termination date. However, if an employee works beyond the 13-week period after the termination date, the employee will be entitled to a new written notice, as if the previous notice had not been given.^[15]

Takeaways

Be mindful of Notice Periods and carefully plan so that notice is not voided;
Ensure compliance with jurisdictional requirements to provide written and conspicuous notice; and
Be aware of legislative changes that could affect employees who work from home.

[1] Employment Standards Act, 2000, S.O. 2000, c. 41, s. 58.1

[2] Bill 79, An Act to amend various statutes with respect to employment and labour and other matters 1 Sess, 43rd Leg, Ontario, 2023 (second reading March 20^th, 2023).

[3] Bill 79, An Act to amend various statutes with respect to employment and labour and other matters 1 Sess, 43rd Leg, Ontario, 2023 (first reading March 20th, 2023) s.53.2(1).

[4]Employment Standards Act, 2000, S.O. 2000, c. 41, s.1

[5] Government of Ontario, Termination of Employment, Temporary Layoff (s.12) (June 5, 2023)

[6]Government of Ontario, Termination of Employment, Temporary Layoff (s.5) (June 5, 2023)

[7]Government of Ontario, Termination of Employment, Temporary Layoff (s.11) (June 5, 2023)

[8]Government of Ontario, Termination of Employment, Temporary Layoff (s.13) (June 5, 2023)

[9] Employment Standards Act, 2000, S.O. 2000, c. 41, s. 58.5

[10]Government of Ontario, Termination of Employment, Mass Terminations (s.12) (June 5, 2023)

[11]Employment Standards Act, 2000, S.O. 2000, c. 41, s. 58.4

[12]Employment Standards Act, 2000, S.O. 2000, c. 41, s. 61.1