Minimum Standards Monitor

Planning to Give Notice of Mass Termination under the ESA? What Employers Should Know

Minimum Standards Monitor

Planning to Give Notice of Mass Termination under the ESA? What Employers Should Know

Date: January 4, 2018

In a decision rendered on September 26, 2017, an Ontario court held that an employer violated the Employment Standards Act, 2000 (ESA) when it failed to file a Form 1 with the Ministry of Labour (MOL) on the same date that that the employer provided approximately 12 months’ working notice of termination to 77 employees. As a result, the employer was not given any credit for the working notice period that preceded the date it filed the Form 1 with the MOL – a period of over one year. Rather, common law damages will be assessed on the basis of a much smaller working notice period of less than 8 weeks. This decision signals that the failure to file a Form 1 contemporaneously with the giving of notice of mass termination may have costly implications for employers.

In Wood v. CTS of Canada Co., the employer had determined in early 2014 that it would be closing its facility in 2015 and gave notice of termination to the 77 affected employees on April 17, 2014. The termination date given was March 27, 2015, which was later extended to June 28, 2015.

Section 58 of the ESA states that where a notice of termination involves more than 50 employees, an employer is required to provide notice to the MOL in a prescribed form (here, a “Form 1”) and post the Form 1 in the workplace. The section further provides that until the Ministry receives the Form 1, notice “shall be deemed not to have been given.”

In this case, the employer did not file and post the Form 1 notice until May 12, 2015, much closer to scheduled termination date.

Mr. Justice Sproat of the Ontario Superior Court of Justice found that once the employer gave notice of termination on April 17, 2014, section 58 of the ESA became engaged. Accordingly, a Form 1 should have been filed with the MOL on that date and posted at the workplace. The failure to do so meant that notice was deemed to have NOT been given for all purposes. As a result, the entirety of the working notice period up to the date the Form 1 was filed (April 17, 2014 to May 12, 2015) was invalidated and the employer received no credit for that period.

Significant to this finding was the fact that upon filing a Form 1, certain government services are triggered and become available to affected employees. The Court found that the failure to file the Form 1 on the date of notice of termination deprived employees of the full potential of those services, and noted that some affected employees had in fact resigned prior to the Form 1 filing.

The financial consequences to the employer in this decision were not addressed: the issue arose in the context of a class action proceeding, and the parties were left to discuss a process to assess damages to be paid to class members.

The finding, however, is a stark warning to employers that failure to file a Form 1 with the MOL and post it on the day notice of mass termination is given may give rise to unanticipated cost consequences. Regardless of the length of notice given, this decision indicates that the employer will not receive any credit for working notice provided until the Form 1 is filed.

The article in this Client Update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©