Ontario’s Employment Standards Act (ESA) lays down the minimum period of notice (or compensation in lieu of such notice) that needs to be provided to most employees that have been terminated without cause (or terminated for cause in the absence of certain types of employee misconduct, such as wilful misconduct).
Importantly, the ESA contains different rules that apply in the event of a mass termination. Recently, the Ontario Government announced that it intends to amend the law to respond to the rise in remote working. This article looks at the existing mass termination rules and the Government’s proposed changes.
What constitutes a mass termination under the ESA?
Under the ESA, some differences apply between a regular termination and a situation of mass termination. The latter is defined in section 58 as taking place when an “employer terminates the employment of 50 or more employees at the employer’s establishment in the same four-week period”.
The mass termination rules do not apply in some circumstances. For example, they do not apply if the number of employees terminated does not represent more than 10 per cent of the number of employees that have been employed for at least three months, and the permanent discontinuance of all or part of the business causes none of the terminations.
What does the notification requirement involve?
If the mass termination rules apply, the employer must notify the Director of Employment Standards before giving the employees notice. The form is located here and asks for information, including the number of employees that are being terminated and the economic circumstances underpinning the mass termination.
Once the Director has received this form, notice can be given to the affected employees. On the first day of the notice period, the form needs to be posted up in the relevant establishment in a place where the employees will notice it and remain there throughout the notice period.
What is the statutory notice period for a mass termination?
Normally, the notice period required by the ESA depends on the employee’s length of service, ranging from one week (after three months of employment) to eight weeks (after eight years or more of employment).
In a mass termination, the length of the notice period instead depends on the number of employees terminated. The notice period, or amount of compensation, if paid in lieu of notice, required under the ESA, is:
- eight weeks if 50 to 199 employees are to be terminated;
- 12 weeks if 200 to 499 employees are to be terminated; and
- 16 weeks if 500 or more employees are to be terminated.
What change is the Government proposing to the mass termination requirements?
On March 13, 2023, the Ontario Government announced that it would seek to pass changes to the ESA so that the existing mass termination rules will also apply to remote workers. The draft legislation has yet to be made available.
Currently, the mass termination rules apply if 50 or more employees are terminated in four weeks at an employer’s “establishment.” An establishment is defined in the ESA as a location where the employer carries on business. Separate locations are deemed to constitute one establishment if they are located within the same municipality or if one or more employees have seniority rights that extend to the other location under a written employment contract by which they may displace another employee of the same employer.
Under the proposed changes, the definition of “establishment” would be expanded to include the remote home offices of employees. The Government has said that this would make employees that work from home eligible to receive the longer notice periods available in a mass termination event.
What else is the Government proposing?
The Government also intends to change the information requirements that apply to new employees. The ESA requires employers to give employees a copy of the most recent version of the employment standards poster within 30 days of starting as an employee.
At this stage, the Government has simply said that the new proposal would require employers to give new employees certain written information, for example, on pay, location and hours, by a particular date.
What has the Government said about the proposed changes?
The Ontario Government has framed the proposed change to mass termination rules as necessary to respond to the changes in how employees conduct their work caused by the COVID-19 pandemic. Specifically, it notes that the pandemic led to a huge increase in the number of people working from home on both an exclusive and hybrid (workplace and home) basis.
The Minister of Labour, Immigration, Training and Skills Development, Monte McNaughton, said that these remote employees should be treated the same as more traditional employees:
“Whether you commute to work every day or not shouldn’t determine what you are owed. No billion-dollar company should be treating their remote employees as second-class.”
These proposed changes follow a raft of changes already made to Ontario’s employment legislation in 2021 and 2022 that seek to respond to changes in how people work. We have reported on many of these changes, such as the creation of rights for digital platform workers, the requirement for some employers to develop policies on the electronic monitoring of employees and on disconnecting from work, and the exclusion of certain business and information technology consultants from the ESA.
Contact Haynes Law Firm in Toronto for Guidance on Employee Termination and Changes to Employment Legislation
The Haynes Law Firm helps both employers and employees deal with the termination process, including their obligations and rights arising from a mass termination event. Paulette Haynes, an experienced employment lawyer, is on top of the ever-changing employment law landscape and will guide your organization to minimize the risk of expensive litigation. Paulette also defends the rights of employees, helping them stand up and advocate for their entitlements. Please contact us online or call us at 416.593.2731.