Your Guide to Compliance and Best Practices
The information in this blog post is intended for informational purposes only and does not constitute legal advice. For specific concerns, please contact us at SWL to discuss your matter.
Laying off employees is never a light matter. It’s emotionally charged and complicated, particularly if you’re a small or medium-sized employer. In Ontario, the Employment Standards Act (ESA) has clear guidelines about mass terminations and there are essential considerations that every employer should take in the mass termination process. We’re here to break it down for you in this overview on mass terminations in Ontario.
Employment Standards Act 101: What Counts as Mass Termination?
Under the ESA, a “mass termination” occurs when:
- 50 to 199 employees are terminated at a single establishment within a four-week period.
- 200 or more employees are terminated at a single establishment within a four-week period.
These numbers differ based on the scale, but for medium-sized businesses, you’re likely looking at the 50-199 range.
Requirements Under the ESA
1. Advance Notice or Pay in Lieu
When conducting mass terminations, the ESA mandates that employers provide written notice to each affected employee and the Ministry of Labour. The length of this notice depends on the number of employees being terminated:
- 50 to 199 employees: at least 8 weeks’ notice
- 200 to 499: at least 12 weeks’ notice
- 500 or more: at least 16 weeks’ notice
2. Severance Pay
In addition to notice of termination (or pay in lieu), severance pay may be owed if an employee’s employment is severed and they have worked for the employer for five or more years, and the employer’s payroll is over $2.5 million.
3. Filing a Form
Employers must complete and file a Form 1 with the Ministry of Labour and distribute it to the employee representatives or union, if applicable, if conducting a mass termination.
Best Downsizing Practices for Small and Medium-Sized Employers
Legal Counsel is Not Optional
Consult an employment lawyer before making any move. They can guide you through the process and help you understand all the obligations under ESA.
Develop a Transparent and Objective Selection Process
To maintain trust and credibility, develop a transparent and objective selection process for identifying positions and employees affected by the downsizing. Consider factors such as performance, skills, qualifications, and future business needs. A transparent and objective selection process can avoid any perceptions of bias or discrimination.
When layoffs are inevitable, transparent communication is key. Be honest, clear, and respectful to all involved parties. This can go a long way in minimizing legal repercussions and maintaining your company’s reputation.
Before you go full throttle into mass terminations, consider alternatives. Could job-sharing, remote work, or temporary lay-off suffice? Sometimes a middle ground can be found that satisfies both business needs and employee welfare.
Document, Document, Document
From the reason for the layoffs to each step taken, document everything. This is crucial in case you face any legal challenges.
Consider offering severance packages that include outplacement services. Assisting your laid-off employees in finding new employment can ease the emotional burden and can sometimes offer tax advantages.
Some employees may have contracts that stipulate terms for termination, which may differ from ESA requirements. Have contracts reviewed by legal counsel so you know your potential liability for termination before terminating employees.
Conduct the termination process in a respectful and private manner. This includes not just what you do but how you do it.
Offer Support to Affected Employees
Supporting affected employees during the downsizing process is essential for maintaining a positive company image and minimizing negative impacts on morale. Consider offering:
- Outplacement services: These services help affected employees transition to new jobs, providing assistance with resume writing, interview preparation, and job search strategies.
- Financial planning assistance: Help employees understand their severance packages and navigate financial decisions.
- Emotional support: Offer access to employee assistance programs or counseling services to help employees cope with the emotional impact of job loss.
Retain and Engage Remaining Employees
After a downsizing event, it is crucial to retain and engage the remaining employees. Reassure them about the company’s stability and their role in the organization’s future success. Provide opportunities for professional development, and consider implementing a team-building program to rebuild trust and camaraderie within the workplace.
Downsizing is hard, both emotionally and legally. Following the ESA and best practices ensures that the process is fair, ethical, and legal. Consulting a qualified employment lawyer is crucial to navigate the complexities involved.
For more tailored advice, feel free to contact us. We’re experts in employment law, and we can help your business steer clear of costly mistakes in mass terminations.