LEGALINK CROSS-BORDER LAYOFFS QUESTIONNAIRE

A COUNTRY BY COUNTRY SUMMARY OF APPLICABLE EMPLOYMENT LAWS

SEARCH QUESTIONNAIRES

PREPARED BY

Arie Gaertner

Miller Canfield Paddock & Stone, LLP, an Ontario Limited Partnership

144 Front Street West, Suite 400, Toronto, Ontario M5J 2L7
Tel: + 416 599 77 00
Fax: + 416 599 780

Learn more about the Legalink Questionnaire

CANADA

PROVISO – the general answers provided herein are with respect to the statutory employment laws of Ontario only governing temporary and mass layoffs. The statutory laws are “minimum requirements” with respect to employee rights and can therefore be “trumped” by the Common Law.

Each Canadian province has statutes similar to that of Ontario, save and except for Quebec; Quebec is a Civil Law jurisdiction, and its laws are often substantially different than in all other Canadian provinces.

Federal employers, who are governed by the Canada Labour Code, Division IX – Group Termination of Employment, are subject to different requirements than provincial employers.

The answers to the questions below do not deal with the employer’s obligation in the event of termination from employment of individual employees, but instead only address temporary and mass lay-offs.

Are there any laws that govern a layoff of employees? If so, what do the laws require?

An employer is entitled to effect a temporary lay-off, subject to any common law rules that might provide otherwise. Subsection 56(2) of the Ontario Employment Standards Act 2000 (“ESA”) defines a temporary lay-off from work as a lay-off of not more than 13 weeks in any period of 20 consecutive, or less than 35 weeks in a period of 52 consecutive weeks. If the employer lays off an employee without specifying a recall date, the employee is not considered to be terminated unless the period of lay-off actually exceeds that of a temporary lay-off.

An employee without a regular work week will be considered laid off for a period longer than the period of a temporary lay-off if, for more than 13 weeks in any period of 20 consecutive weeks, or more than 35 weeks in any period of 52 consecutive weeks, he or she earns less than one-half the average amount he or she would have earned per week in the period of 12 consecutive weeks preceding the consecutive week period.

The ESA specifies how certain absences from work should be taken into account for lay-off purposes in addition to delineating what is an “excluded week” for the purposes of calculating the lay-off period.

With respect to employees who do not have a regular work week, an “excluded week” will be counted toward the period of 20 or 52 weeks as the case may be. With respect to employees who do not have a regular work week, an “excluded week” will not be counted as part of the 13 or more weeks, but shall be counted as part of the 20-week period. In addition, an “excluded week” shall not be counted as part of the 35 or more weeks, but shall be counted as part of the 52-week period.

Are there any formal requirements for terminating an employee or groups of employees?

Ontario Regulation 288/01 sets out an employer’s notice obligations in situations of “mass termination” where 50 or more employees are terminated within a prescribed period. Special rules apply where 50 or more employees receive notice of termination at an employer’s establishment within a four-week period (otherwise known as “mass termination”). In particular, the following notice periods are prescribed by section 3 of Ontario Regulation 288/01:

Number of Employees Affected Minimum Notice of Termination or Termination Pay or Both

50 or more but fewer than 200: At least eight weeks
200 or more but fewer than 500: At least 12 weeks
500 or more: At least 16 weeks

When a mass termination occurs, the employer is required to provide the Director of Employment Standards with certain prescribed information, and the notice of termination is not effective unless the employer submits it in the prescribed form prior to giving notice to the affected employees.

The “mass termination” rules do not apply if:

The number of employees whose employment is terminated at the establishment is not more than 10 percent of the number of employees who have been employed there for at least three months; and
The terminations were not caused by the permanent discontinuance of part of the employer’s business at the establishment

Are there special legal requirements for a layoff caused by redundancy in the workforce?

See above.

Are there employment laws that laid-off employees can use to challenge their inclusion in the layoff?

Not as a general rule. However, an employee could try to advance a claim under the Ontario Human Rights Code.

What sanctions or penalties may be imposed against employers for violating any of the requirements mentioned in No’s 1-4 above?

Compensation for termination and severance pay. In only very rare instances is there any prospect of reinstatement.

Part XVIII of the ESA deals with reprisals by employers against employees for exercising their rights or attempting to enforce their rights under the ESA.

What are one or two most common mistakes that employers make that lead to liability for a layoff?

Improper calculation of temporary lay-off
Unintentionally triggering “mass termination” provisions
Failure to pay proper notice (or payment in lieu) and severance amounts
Failure to utilize advance written notice as a means of reducing or eliminating the need to pay termination pay

What other employment issues are likely to arise from a layoff in your jurisdiction that you have not addressed in your answers to the previous questions?

As noted at the outset, the amounts prescribed by the ESA are minimums only. There are additional obligations under the common law that are significantly greater than the amounts prescribed by the ESA.

The answers provided here do not address the circumstances that arise where the work force is represented by a union. In such circumstances, the collective agreement between the employer and trade union may well contain specific termination provisions that exceed the ESA minimums where there are mass lay-offs.