Ontario’s Employment Standards Act requires that more notice than normal must be given to all employees affected by a mass termination. Letting as few as 50 employees go within a four-week period can constitute a mass termination.

Employers who terminate 50 or more employees within a four-week period, must provide 8 weeks’ notice to those employees, unless that is less than 10% of their workforce and they are not discontinuing all or part of their business. The notice requirement increases to 12 weeks, when 200 employees are affected in that period and to 16 weeks when 500 employees are affected. These provisions raise the cost of adjusting to decreases in factory loading.   (Note that in addition to the notice of termination required under the Employment Standards Act, there may be severance pay requirements, common law or other contractual notice obligations, and obligations arising under a collective agreement).

Let’s focus on the ESA Mass Termination notice requirements.

Often an employer will have an opportunity to avoid the Mass Termination notice requirements by staging the terminations – doing say 12 a week for 5 weeks rather than 60 all at once.    

There is nothing ‘sharp’ about doing so. In fact an employer response such as this is one consequence the Legislature likely intended when enacting these provisions – to avoid having local labour markets flooded with a surge of laid off employees.   Depending on the seniority of the workforce, there can be some significant savings in this approach.

But is it the best way to go?

In addition to legal and financial considerations, there is an employee relations dimension to consider: is it best to ‘get it over with all at once and move on’ or to proceed in a staged fashion?

There is no right answer that is applicable in all circumstances.  

Employers who can see with some clarity a ‘new normal’ required staffing level may be inclined to do the terminations all at once. If they can credibly assure those employees who remain that they do not believe further lay offs will be likely, employers who effect a mass termination, may be able to limit considerably the impact of the terminations on the morale and productivity of the continuing employees.  

 Another employer might choose to proceed in a staged fashion, sending out temps or junior employees first, offering a voluntary termination package, and continuing to watch order flow – an approach employees would understand, though not like to see.   This approach might avoid having to let some good employees go if things pick up during the staging period.   What it does do is prolong the period during which the layoffs occur and that can erode morale.

The best approach in any given case will depend on an analysis of your organization’s unique financial, legal, commercial, and employee relations challenges.

If you have any thoughts about the above or any questions about employee terminations, we’d love to hear from you.  You can reach the writer at  gary.graham@gowlings.com  or you can visit our website at  www.gowlings.com/industry/md.asp.