2MM Canadian Jobs: What You Need To Know About Mass Terminations

President Trump has officially announced his plan for significant tariffs on imports from Canada and Mexico, with most goods being hit with an additional 25% tariff. The move will unquestionably penalize American consumers of Canadian goods, but our manufacturing and agriculture sectors will undoubtedly be hit hard.

With our Prime Minister awaiting a leadership change, an Ontario Provincial election coming in weeks and a Federal one likely soon to follow, it is hard to tell exactly what will come next. The Prime Minister has launched retaliatory counter-tariffs, and the Premiers have actively been meeting with their Washington counterparts. However, all accounts indicate that President Trump remains undeterred, and it is unclear exactly what ‘victory’ he is seeking here. 

What we do know is that the impacts on the workplace will be profound.  Some estimates suggest nearly 2 million Canadian jobs are on the line, which would have significant impacts on businesses large and small. Yet if you need to conduct a mass termination within your workplace, you should know that you’re playing by a different set of rules under the law. 

What is a mass termination in Ontario, and what do employers need to know?

What is a mass termination?

Under the Employment Standards Act, 2000 (the “Act”), a mass termination means letting go of 50 or more employees from an establishment within a four-week period. If an employee works exclusively remotely (i.e: from home) then their home is counted as their workplace for the purposes of a mass termination. If they work from home as well as from an office location then the office is considered the establishment. 

While ‘mass’ is defined as more than 50 employees, the employer’s legal requirements under the Act vary given how many employees will be let go. These obligations are triggered as soon as there are more than 50, but notice periods for 50 employees vs. 200 employees will look different under the law. 

How should employers conduct a mass termination?

A mass termination requires employers to notify the Ministry of Labour before taking any further steps. This is done in the form of a Form 1, which is also downloadable from the Ministry of Labour’s website. This notice needs to be sent in written form to the Director of Employment Standards’ office. It can be done via email, fax, in person, or through mail delivery.

This Form 1 notice also needs to be posted publicly within the workplace, and delivered to each individual employee who will be impacted by the layoffs. No notice period begins until the Form 1 has been distributed widely and through the proper means. In other words, employers who forget or are unaware and skip this step may be on the hook for a prolonged notice period given the circumstances. 

What severance is required in a mass termination?

The amount of termination pay is determined by the Act based on the number of employees involved in the mass termination:

50 to 199 employees: 8 weeks’ notice or pay in lieu of notice

200 to 499 employees: 12 weeks’ notice or pay in lieu of notice

500 or more employees: 16 weeks’ notice or pay in lieu of notice

These measurements are irrelevant of how long an employee has been with your organization, so even a newer employee may be entitled to 16 weeks’ pay in lieu of notice. 

However, employees that have been with the organization for 5 years or longer may also be entitled to severance pay. This is an additional amount under the Act for employees of longer duration where the company has more than 50 employees, or a payroll over $2.5 million. This amount will be unique to each employees’ length of service, but can be up to 26 weeks. 

Can I conduct temporary layoffs instead?

The answer to this depends entirely upon your employment agreements. While the Act does have provisions for temporary layoffs, both parties must have previously agreed to this option in a written employment contract. Without a written employment contract that states that temporary layoffs are a possibility, and will not be considered a dismissal, then they may actually be a termination of employment.

The leading case on constructive dismissal is a Supreme Court case that involved a senior level employee who was temporarily laid off without having previously agreed. The Supreme Court established that this sort of substantial, unilateral change by an employer can indeed become constructive dismissal. In other words, employees could claim that they were actually terminated, and the Court may very well agree. 

Is the minimum severance payment enough?

Not necessarily. While the Act requires a minimum amount of severance specific to mass terminations, that does not mean that employees are required to accept that amount. Depending on their employment contract and what limitations it holds, employees could potentially sue for common law notice. 

Remember, if an employee has no written employment contract, or if their contract was hastily drafted years ago and has not been touched since, there may be a problem. Unwritten or badly written contracts do not lock an employee into just accepting your minimum offer, which means that they could potentially sue for a larger amount.

Final Thoughts

The answer comes from working with an employment lawyer. Even in a mass termination, a lawyer can help assess individual situations, and offer advice to help you mitigate your risks. Taking the extra measures to do things properly may be a nuisance in the moment, but can end up saving the business from significant financial penalties in a courtroom later on.

This is a difficult time full of uncertainty for everyone, but my mission as always is to protect Canadian businesses, and that will not change. Contact my office today to set up a consultation.