by Katie Clayton and Farrah Sunderani
In today’s economy it’s become commonplace for employers to terminate large numbers of employees at one time. Depending on the number of employees being terminated, an employer may fall under federal or provincial group termination provisions designed to protect employees and the local economy from an influx of terminated individuals re-entering the workforce. As such, it’s important employers be aware of the obligations they are under in order to protect themselves against, at times, hefty consequences.
Federal legislation
Employers operating in federally regulated industries are subject to the Canada Labour Code, which contains specific requirements in the event of a group termination in Division IX, Part III and the associated regulations. These define a group termination as a termination of 50 or more employees in the same establishment within a four- week period. In such a case, the employer must provide the Minister of Labour with 16 weeks’ notice in writing of the pending terminations under Section 212. The notice of group terminations is separate and apart from the notice entitlement for each individual employee. The group termination notice itself must contain the following information:
- employer’s name;
- location of terminations;
- nature of employer’s industry;
- reasons for terminations;
- number of employees in each classification who will be terminated;
- dates you intend to terminate employees; and
- name of trade union representing employees (if applicable).
The group termination requirements under the Canada Labour Code are quite stringent. In the absence of complying with the requirements, an employer may be liable criminally and held responsible for paying a significant fine.
In addition to providing notice, employers must set up a joint planning committee in order to establish an adjustment program to minimize the impact of the terminations on the affected employees. An arbitrator may also be appointed to help the joint planning committee develop adjustment programs and help resolve problems.
The Canada Labour Code does provide for various exceptions to the rigorous group termination provisions. Employees who are employed on a seasonal or irregular basis where they can elect when to work are not subject to the group termination provisions. The minister also can waive the group termination requirements in certain instances set out in Section 228 of the Canada Labour Code.
In 2008, Air Canada made such an application under Section 228 to waive the requirements of Division IX in Air Canada v. C.U.P.E. ((15 October, 2008) WL 4897068 (Can. Arb. Bd.); (14 September, 2008) WL 4897079 (Can. Arb. Bd.)) After announcing that it intended to lay off approximately 1,500 employees in Vancouver, Toronto, Calgary, and Montreal, Air Canada wrote to the Minister requesting that the requirements of Division IX be waived on the basis that their collective agreement contained sufficient mechanisms to satisfy the requirements of Division IX.
The Minister denied the request and appointed a federal mediator to assist the Joint Planning Committee in meeting the objectives of the Labour Code. Ultimately, a joint request was made by the parties to the Minister to appoint an arbitrator to assist the Joint Planning Committee in developing an adjustment plan for the employees.
At arbitration, among other things, the arbitrator noted that although he had to balance both parties’ interests and was mindful that Air Canada’s financial viability was an important consideration, he ordered Air Canada to spend $5.5 million (versus the $3.8 million proposed by Air Canada) to assist employees in mitigating the layoffs.
Provincial legislation
It’s not just federally regulated industries that are subject to group termination provisions. Each province has its own legislation that mirrors that set out in the Canada Labour Code. Although specific requirements may vary from province to province, the tenet of these provisions remains consistent – to minimize the harm faced by employees and to provide sufficient advance notice to minimize the impact on the local economy.
Similar to the federal requirements, the Alberta Employment Standards Code states in Section 137 that where an employer intends to terminate 50 or more employees at a single location within a four-week period, four weeks of written notice must be provided to the Minister of Human Resources and Employment. Requirements of what to include as part of the written notice are also set out.
Similarly, Section 64 of the British Columbia Employment Standards Act defines a group termination as a termination of 50 or more employees at a single location to be terminated in any two-month period. However, the British Columbia legislation sets out varying amounts of notice (from eight to 16 weeks) related to the number of employees who will be terminated. Notice must be sent to each affected employee, any trade union representing the employees, and the Minister of Skills Development and Labour.
Take home points
Where employers intend to terminate employees in mass numbers, particular attention should be paid to group termination provisions in the applicable legislation. In particular, determining which employees should be included in the group termination calculation and which can be exempt or handled through alternative provisions such as temporary layoffs may make a significant difference for employers in the cost and time associated with group termination procedures.