In a number of Canadian jurisdictions, when conducting a collective dismissal or mass termination, an employer will have significant obligations that include giving increased notice of the collective dismissal or providing payment in lieu of and equivalent to that notice.
In a number of Canadian provinces, legislators have enacted a precise definition of collective dismissal. In general, a collective dismissal occurs when a certain number of employees are dismissed within a period of time specified by the legislation.
The length of the notice period–and therefore the amount of the employer’s financial obligation–will vary based on the applicable legislation and the number of employees affected. As a result, it’s crucial to determine the number of employees impacted.
But what about waves of collective dismissals that extend beyond the period specified in the legislation? Do they constitute a single collective dismissal or several independent collective dismissals? In Quebec, this question was answered by arbitrator André G. Lavoie in Syndicat des travailleurs et travailleuses d’Orica (CSN) and Orica Canada Inc.
Facts and arguments
The issue in this case was how to interpret section 84.0.1 of Quebec’s Act respecting Labour Standards (LSA), which defines collective dismissal and, more specifically, how to calculate the two-month period referred to in that section.
From September 2012 to December 2013, the employer carried out five waves of collective dismissals. In total, 167 employees were dismissed. The employer paid each of the affected employees an indemnity equivalent to the notice required by the statute when a collective dismissal of 10 to 99 employees occurs.
The union argued that the employer had to pay an indemnity equivalent to the notice required when a collective dismissal of 100 or more employees occurs. The union argued that when an employer dismisses 10 or more employees within two consecutive months, the collective dismissal mechanism is automatically triggered and any subsequent dismissal must be included for the purpose of calculating the number of employees affected.
The employer argued the contrary–that the number of employees affected has to be calculated over a fixed period of two consecutive months and each subsequent wave of dismissals has to be calculated separately.
The arbitrator first reviewed the fundamental elements of the provisions and the requirements governing collective dismissals. The purpose of these provisions is to protect the affected employees from the difficulties related to finding new employment in a context where a large number of employees enter the labor market simultaneously.
On that point, the arbitrator noted four conditions that need to be met for a situation to be characterized as a “collective dismissal” in Quebec:
- Ten or more employees are dismissed;
- The employees are actively working;
- The affected employees work in the same establishment; and
- The dismissals take place over a period of two consecutive months.
In the arbitrator’s opinion, the period of two consecutive months referred to in the LSA is not only the period that is necessary to trigger the various provisions governing collective dismissals, but also the reference period for counting the number of employees affected by the collective dismissal in question. In other words, when the legislators defined the concept of collective dismissal, they specified the period during which the number of employees affected must be counted.
The arbitrator therefore rejected the union’s argument on the grounds that it would extend the notice period provided in the LSA. Ultimately, the arbitrator found that dividing dismissals into waves was permissible as the division was genuine and in no way artificial. In this case, the waves of dismissals had been divided over a period of more than 15 months due to market variations.
Key points for employers
This decision is of interest to any employer in Quebec that engages in collective dismissals.
The decision rejected an interpretation of the statute that would have had serious consequences for employers and been difficult to manage from a human resources perspective. Had the arbitrator confirmed the union’s interpretation, any dismissal following a collective dismissal, for an indefinite period of time, would have been considered in determining the notice to be given to the affected employees.
However, it is important to remember the arbitrator’s words of caution: The division of waves of dismissals must not be artificial and done in order to circumvent the provisions of the LSA. As such, it will be important for an employer to demonstrate the underlying rationale for dividing the dismissals, when applicable.