A recent court decision in Ontario serves as a reminder to employers to tread carefully when it comes to mass terminations.

In the recent decision, Wood v. CTS of Canada Co., the Mississauga, Ont.-based employer was permanently closing a facility and provided a lengthy working notice of termination to 77 affected employees. However, the Ontario Superior Court of Justice found the employer’s failure to comply with the Employment Standards Act’s technical posting requirement for mass terminations meant the notice of termination given prior to the date of the posting was void, exposing the company to potentially significant liability for that period.

Read: Highlights of Ontario’s labour law changes

In this case, the employer gave written notice to the affected employees on April 17, 2014, that their employment would terminate on March 27, 2015. It later extended the date to June 28, 2015. The employer advised the employees it expected them to work throughout the notice period. The notice in this case triggered the act’s provisions for mass terminations, since the employer was terminating the employment of 50 or more employees in the same four-week period.

Where a mass termination occurs, an employer must provide notice to the director of the Ontario Ministry of Labour in a prescribed form and post it in the workplace on the first day of the notice period. Providing the form to the director is significant because it results in some government services becoming available to employees to assist with their transition to new employment. Those services become available in mass termination cases because it’s presumably more difficult for employees to find replacement work when the employer may be flooding the job market with a large number of similarly skilled employees in a short period of time.

In order to ensure an employer posts the form in the workplace and files it with the director, the Employment Standards Act states that notice “shall be deemed not to have been given” until the company complies with the requirements.

Read: Employers given mixed messages on termination clauses in employment contracts

In this case, the employer didn’t file and post the form notice until May 12, 2015, which was approximately a month before the employees’ termination date, even though it was more than a year into the working notice period.

The court found that with the notice of termination on April 17, 2014, having triggered the act, the employer should have filed a form with the director on that date and posted it in the workplace. The employer had, therefore, breached the Employment Standards Act.

On the issue of remedy, the employer argued that filing the form was only a prerequisite to triggering the start of the notice period. It argued that it should otherwise get credit for the working notice provided before it filed the form on the basis that the employees knew their employment was coming to an end and had a fair opportunity to begin searching for new employment.

The court disagreed, finding that the employer’s failure to post the form and file it with the director on April 17, 2014, meant it was deemed to not have given the notice for all purposes. As a result, the entirety of the working notice period up to the date it filed the form — April 17, 2014, to May 12, 2015 — was invalid and the employer received no credit for that period. The court found that when interpreting minimum standards legislation such as the Employment Standards Act, it should give preference to reasonable interpretations that provide the greater benefit to employees.

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The decision didn’t address the financial consequences to the employer as the issue arose in the context of a class action proceeding. While the court left the parties to discuss a process to assess the damages owed to class members, the case is a significant warning to all employers to ensure compliance with the technical provisions of the act when providing notice of a mass termination or risk unanticipated and potentially significant financial liability.

Thomas Agnew is an employment and labour lawyer at Hicks Morley, advising public and private sector employers on a wide range of human resources issues. These are the views of the author and not necessarily those of Benefits Canada.
Copyright © 2018 Transcontinental Media G.P. Originally published on benefitscanada.com

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