Different legal requirements for group terminations when operating in the Canadian North

By Genevieve E. Mushaluk and Jenna R. Seavers, Fillmore Riley LLP

In December 2015, a mass termination of employment took place at the troubled De Beers Canada mine, located in Snap Lake, N.W.T. CEO Kim Truter personally advised 434 employees that they were out of work and that the mine would be closing. Of the 400 permanent employees, about 100 were northerners.

In addition to making difficult business decisions, companies must also navigate employment law to ensure the execution of “group terminations” is in accordance with employment legislation. In the De Beers layoff, which involved the termination of more than 300 employees, the legislation provides that permanent employees were entitled to 16 weeks’ notice of the termination of their employment. Further, pursuant to the legislation, De Beers was required to inform the government of its intention to terminate the employees.

“Group termination” refers to a situation in which an employer will be terminating numerous employees working in a single location, either simultaneously or within a short timeframe. In most provinces, when an employer plans to terminate 50 or more employees in a span of four weeks or less, employment legislation requires that the employer be mindful of specific group termination legal obligations. One of the requirements is that the employer must provide notification to the government.

Group terminations are covered in both federal and provincial employment legislation. The general requirements are largely similar for employers operating federally and within most of the Canadian provinces; however, different rules come into play when dealing with the northern provinces and/or territories, specifically Yukon, Northwest Territories and Nunavut.

In most provinces, the termination of 50 or more employees within the span of four weeks or less triggers an obligation to provide notification to the government.

Depending on the jurisdiction, group termination legislation can require eight to 16 weeks of advance notice of the termination. As the number of employees that are planned to be terminated increases, the notice period increases as well.

For example, the Ontario Employment Standards Act and corresponding regulations require the following notice of group terminations be provided to the director of Employment Standards:

  1. Notice shall be given at least eight weeks before termination if the number of employees whose employment is terminated is 50 or more but fewer than 200.
  2. Notice shall be given at least 12 weeks before termination if the number of employees whose employment is terminated is 200 or more but fewer than 500.
  3. Notice shall be given at least 16 weeks before termination, if the number of employees whose employment is terminated is 500 or more. 

The rationale behind this requirement is that, with advance notice, governments may be able to mitigate the effects of group terminations, especially very large-scale group terminations which can have a correspondingly large effect on local economies.

The northern difference
As previously noted, the legislative requirements regarding group terminations are slightly different for employers operating in Northern Canada. Notice requirements are more onerous in the Yukon, Northwest Territories and Nunavut because their respective employment legislation requires government notice when 25 or more employees will be terminated within a four-week period, as compared to the typical Canadian provincial threshold of 50 employees. This means that advance government notice requirements will be triggered more frequently for employers in the northern provinces and territories.

In Yukon, Northwest Territories and Nunavut, the group termination provisions require government notice to be provided in accordance with the following schedule:

  1. Four weeks of notice if 25 to 49 employees are to be terminated within a four-week period.
  2. Eight weeks of notice if 50 to 99 employees are to be terminated within a four-week period.
  3. Twelve weeks of notice if 100 to 299 employees are to be terminated within a four-week period.
  4. Sixteen weeks of notice if 300 or more employees are to be terminated within a four-week period.

It is important for employers who typically operate within “non-northern” jurisdictions to be aware of this augmented requirement because there are consequences for non-compliance. Employers will be required to provide pay in lieu of notice if they fail to comply with the notice requirements. Further, employment legislation requires that no employees be terminated before the notice period required by the group termination provisions has expired.

Employers should also note that these legislative notice requirements reflect statutory minimums, and depending on the individual’s circumstances, an employee may be entitled to an increased notice period pursuant to an employment agreement, collective agreement or at common law.

As mentioned earlier, the rationale behind the notice requirements for group termination is to enable the government to minimize the negative impact on employees. The notice requirement allows the government to facilitate workforce supports such as employment insurance, resumé and job search services and retraining programs.

The lower threshold for group terminations (25 or more employees) in Yukon, Northwest Territories and Nunavut is to be expected due to the heightened impact such a termination would have on a smaller economy. Ideally, with adequate notice, steps can be taken to minimize the effects of a termination on a small economy.

Exceptions may apply
In most jurisdictions, employees who have worked for less than three months, seasonal employees, employees employed for a definite period of time or employees who have refused “reasonable” alternative employment are excluded from the notice requirements. In some provinces, certain industries such as construction, fishing and firefighting are exempt from the group termination requirements. In other provinces, the rules do not apply to terminations caused by “unforeseeable events” or if at least 90 per cent of the workforce continues to be employed, provided the terminations are not due to the permanent shutdown of the business.

There are consequences for non-compliance with the notice requirements. The failure to provide government notice of a group termination was considered in a 2015 case of the Ontario Labour Relations Board.

In this case, the employer decided to close one of its distribution centres. While the employer posted a notice of termination at the workplace, they did not give a copy of this notice to the director of Employment Standards as required by the Employment Standards Act. Under the legislation, notice to employees is not effective until the director of Employment Standards receives the appropriate notice.

The Employment Standards officer concluded that the failure to inform the director of Employment Standards was in breach of the notice requirements, which entitled the employee to termination pay in lieu of notice. An employee sought to expand the order of the Employment Standards officer to cover other employees who were terminated. This claim was denied as the employee could not establish that she was a representative of the other employees, who had not asserted their entitlements by filing their own complaints.

The takeaway points from this case example are twofold: first, if an employer fails to meet the group termination notice requirements, they will be found in breach of the legislation and they can be ordered to pay termination pay in lieu of notice, and second, employees who have not been provided with sufficient notice pursuant to the legislation could advance independent claims (unless represented by a collective agent, such as a union), seeking compensation above the amounts required by the legislation.

Genevieve E. Mushaluk and Jenna R. Seavers earned their Juris Doctor degrees at the University of Manitoba. They are currently completing their articles at Fillmore Riley LLP, with an expected call to the Manitoba Bar in June 2017.

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Piling Canada is the premier national voice for the Canadian deep foundation construction industry. Each issue is dedicated to providing readers with current and informative editorial, including project updates, company profiles, technological advancements, safety news, environmental information, HR advice, pertinent legal issues and more.