Obligations of Federally Regulated Employers when Laying-off or Terminating Employees

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  • March 26, 2020

Obligations of Federally Regulated Employers when Laying-off or Terminating Employees

Current to March 26, 2020

With the current COVID-19 crisis, many federally regulated employers are facing difficult workplace decisions. The information set out below addresses only the provisions of the Canada Labour Code affecting federally regulated employers.  Employers may also have contractual or common law obligations which exceed the minimum requirements discussed below.

Notice of Termination

The Canada Labour Code (the “Code”) requires employers to provide employees who have completed at least three consecutive months of employment, two weeks’ notice of termination. The notice must be in writing. Alternatively, the employer may provide the employee two weeks’ of wages in lieu of providing notice.

Severance Requirements

The Code also requires employers to provide employees who have completed at least 12 consecutive months of employment severance in addition to the notice requirements. An employer must pay the greater of:

(a)  two days wages at the employee’s regular rate of wages for the employee’s regular hours of work in respect of each completed year of employment that is within the term of the employee’s continuous employment by the employer, and

(b) five days wages at the employee’s regular rate of wages for the employee’s regular hours of work.

 

Group Termination Requirements

Where an employer intends to terminate more than 50 employees within a 4 week period they must provide the Minister of Labour notice in writing at least 16 weeks prior to the date of termination. The Code and Regulations describe specific information that must be included in the notice to the Minister, for example, the dates on which the termination will occur and the estimated number of employees impacted.

A copy of the notice must also be provided to the Minister of Employment and Social Development, the Canada Employment Insurance Commission and any impacted trade union representing an affected employee. Where employees are not represented by a trade  union the notice must be provided to the affected employees or posted in a conspicuous place within the industrial establishment.

In addition, an employer must provide each affected employee as soon as possible after the notice is provided, and not later than 2 weeks prior to the date of termination, a statement in writing setting out, as of that date, the employee’s:

  • vacation benefits,
  • wages,
  • severance pay and
  • any other benefits and pay arising from the employee’s employment with the employer.

An employer must also establish a joint planning committee which includes representation from the affected employees and/or the trade union representing the employees.

Failure by the employer to provide notice to the Minister, the statement of benefits to employees or to establish the joint planning committee are offences under the Code and are subject to fines of up to $10,000 per infraction.

Applying for a Waiver of the Group Termination Requirements

An employer may apply to the Minister to waive each or all of the requirements including: 1) the 16 weeks notice; 2) the provision of the statement of benefits to employees; and/or 3) the creation of the joint planning committee.

In making such a waiver request the employer must show that the notice requirements are or would be:

  • unduly prejudicial to employees or groups of employees at the establishment;
  • unduly prejudicial to the interests of the employer;
  • seriously detrimental to the operation of the industrial establishment; or
  • not necessary, because measures for the assistance of redundant employees at that establishment that are substantially the same or to the same effect as the measures established by this Division or that provision, as the case may be, have been established by collective agreement or otherwise.

The request for waiver can be found at:

https://catalogue.servicecanada.gc.ca/content/EForms/en/CallForm.html?Lang=en&PDF=ESDC-LAB1197.pdf

To date the government has provided no guidance on how the COVID-19 pandemic will affect a request to waive the group notification requirements or on whether the lay-off exception will be deemed to apply if business closures or reductions exceed three months.

Lay-off Exception

Generally, the Code deems that a lay-off is a termination which would be subject to notice of termination, group termination notice and severance requirements. There are important exceptions where a lay-off will not be considered a termination that may be applicable to employers in the context of the current COVID-19 crisis.

Examples of where a lay-off will not be a termination under the Code include where:

  • the term of the lay-off is three months or less;
  • the term of the lay-off is more than three months and less than 6 months and the employer provides a fixed date of recall. The employer must recall or attempt to recall the employee on that date;
  • the term of the lay-off is more than three months and
    • the employee continues during the term of the lay-off to receive payments from his employer in an amount agreed on by the employee and his employer;
    • the employer continues to make payments for the benefit of the employee to a pension plan that is registered pursuant to the Pension Benefits Standards Actor under a group or employee insurance plan,
    • the employee receives supplementary unemployment benefits, or
    • the employee would be entitled to supplementary unemployment benefits but is disqualified from receiving them pursuant to the Employment Insurance Act;
  • the term of the lay-off is more than three months but not more than 12 months and the employee, throughout the term of the lay-off, maintains recall rights pursuant to a collective agreement.

If the employer has no expectation of recalling an employee to work, the employee should be given notice of termination of employment (or pay in lieu) and severance in accordance with the Code.

Jurisdiction of the Board to Hear Unjust Dismissal Complaints

The Board will not find that an employee has been unjustly dismissed where the lay-off was because of lack of work or because of the discontinuance of a function.