Layoffs and Group Terminations

Sometimes fluctuations in your business require temporary reductions in staffing levels. Such reductions may or may not become permanent in nature. Where a layoff involves a number of employees, it may evolve into a group termination. In any event, a keen understanding of the layoff and group termination provisions in the Employment Standards Act is essential to your ability to manage your human resources efficiently.

Layoffs

An employee who is laid off cannot claim termination pay under the act until the layoff exceeds 13 weeks in a 20-week period or — where a collective agreement is in place and includes recall provisions — until the layoff exceeds the period of recall under a collective agreement.

The termination date, should the layoff reach this point, is deemed to be the date upon which the employee commenced the layoff. It is important to note that a layoff due to lack of work does not amount to termination for just cause.

Group Terminations

If an employer intends to terminate 50 or more employees at a single location within a two-month period, additional notice of termination is required. In these circumstances, Section 64 requires that notice be provided to each of the employees who will be terminated, the trade union representing the employees (if applicable), and the Minister of Labour. The notice provided must specify the number of employees to be affected, the effective date or dates of the termination, and the reasons for the termination.

In certain situations, an employer may lay off a group of 50 or more employees without immediately terminating them. However, as explained, a layoff is deemed to be a termination if it exceeds 13 weeks in a 20-week period or exceeds the period of recall under a collective agreement. Therefore, in situations where the prospect of re-employment is slim, it may be advisable to provide advance notice of termination pursuant to Section 64 in order to reduce any future liability for termination pay.

The group notice requirements are as follows:

NUMBER OF EMPLOYEES	NOTICE REQUIRED
50 to 100 employees	8 weeks before effective date of first termination
101 to 300 employees	12 weeks before effective date of first termination
301 or more employees	16 weeks before effective date of first termination

An employer may provide either working notice, payment in lieu of notice of termination, or a combination of both, provided that the sum is equal to the amounts set out in the above table.

Ineffective Notice

The notice required under the act will not be effective if the employee is on annual vacation, approved leave of absence, or temporary layoff. In addition, notice is not effective if it coincides with a period during which an employee is absent from work due to a strike or lockout, or because of medical reasons (including short-term sick leave, long-term disability or workers’ compensation leave).

If an employee continues to work past the end of the notice period, prior notice of termination is deemed void and the employment relationship continues. In order to meet your legal obligations, you would have to provide new notice or payment in lieu of notice to terminate an employee who has worked beyond a prior notice period.

Finally, once proper working notice is provided, you are prohibited from changing the employee’s wage or any other term or condition of employment without the written consent of the employee, or a trade union representing the employee if the employment is governed by a collective agreement. Changes to employment that are prohibited may include a change in duties or responsibilities, limiting of authority, or a reduction of hours.

Exceptions

The act provides for several exceptions to the notice. Employees hired under certain arrangements, such as under a definite term contract, are not entitled to notice of termination, or payment in lieu of notice. For more information about these exceptions, visit Employment Standards Act - Exceptions.

Information provided by HARRIS & COMPANY. For more information about HARRIS & COMPANY, please visit harrisco.com.