Update on Notice Periods in Mass Terminations

Written on behalf of Peter McSherry

In a prior post, we reviewed the notice requirements under the provincial Employment Standards Act (the Act) with respect to a mass termination in the context of a decision released in 2017 by the Ontario Superior Court. In the case, 77 employees of a manufacturing plant were set to be let go due to the plant’s closure. The employees were provided with notice 11 months prior to the closing, but the relevant forms were not filed with the Ministry of Labour until two months after the plant was shut down.

This decision concluded that the employer’s failure to notify the Ministry resulted in the legislative notice requirement not being met. As a result, the notice provided to the employees had no legal effect, and the court awarded a further 11 months’ of pay be awarded to all 77 employees, at significant cost to the employer.

The Crux of the Case

The Act requires that an employer give notice to the Ministry of Labour for all mass terminations. The issue to be determined was when this notice was required. Should it be given at the time of the termination letters being given to the employees, or at least 8 weeks prior to the last day of active employment? This 8 week period is the statutory notice period required under the Act.

The initial judge had determined that the notice to the Ministry must be given when the employees are notified. The Court of Appeal recently reviewed and set aside critical aspects of this decision.

The company had given prior working notice of termination to its employees but it did not notify the Ministry of the mass termination until approximately one year later. The initial judge had determined that this late notice to the Ministry violated the statute and negated the prior working notice. This had dramatically favourable consequences to the employees’ claims.

Review by the Court of Appeal

The Court of Appeal concluded that the trial judge had erred in finding that the notice to the Ministry needed to be given at the outset of the termination notice to the employees. Instead, notice was required prior to the end of the period of statutory working notice, which in this case was 8 weeks. The employer had fallen 12 days short of this requirement. Instead of asserting that this conduct violated the Act and invalidated the notice given to the employees, the court concluded that this wrongdoing resulted in a claim of only 12 days compensation as the actual notice to the Ministry was provided 12 days into this 8-week period.

Working Notice & Overtime

A further interesting argument involved the impact of excessive overtime in the period of working notice. The Court of Appeal agreed with the prior decision that the demands of the employer that certain employees work excessive overtime hours in this period would deny the employer credit for this period of working notice. The theory accepted was that working notice is intended to allow the employee the opportunity to find other employment and excessive forced overtime prevents the employees from doing so.

Result

The end result of the case was that the claims of the employees were dramatically reduced. Instead of the original award of 11 additional months’ compensation, each employee was found to be entitled to pay for the 12-day shortcoming. The employees forced to work excessive overtime were allowed additional monetary compensation.

Legal Advice Can be Critical

The law on this subject had not been litigated previously. The case was a difficult one. The facts are reflective of the need to take legal advice and understand the nature of the risk which is being encountered. If you are facing a possible claim for wrongful dismissal, contact the offices of Guelph employment lawyer Peter McSherry. We can guide you through the issues and defend your position. Contact us online or by phone at 519-821-5465 to schedule a consultation.