Employees who are terminated without cause must be provided with “reasonable notice” or compensation in lieu of. The courts typically consider a number of quantitative factors when determining what reasonable notice should be, including how long the employee worked for the employer. In a recent case before the Court of Appeal for Ontario, the courts were also asked whether there were qualitative factors to consider when determining reasonable notice.
The employer operated a manufacturing plant. On April 17, 2014, the employer gave written notice to its employees that the plant would be closing and their employment would be terminated on March 27, 2015. The employer subsequently extended the termination date for most employees to June 26, 2015.
The province’s Employment Standards Act (“ESA”) has a number of requirements surrounding mass terminations. S. 58(1) states that employers must give eight weeks’ notice when terminating 50 or more employees in the same four-week period. Additionally, the employer must provide the ESA Director with information about the terminations in what is known as a Form 1. The form must also be posted in the employer’s workplace. Notice is not deemed to have been given until a Form 1 is delivered to the Director. In this case, the employer did no serve and post the Form 1 information until 12 days into the mandatory minimum eight-week notice period, and more than a year after it gave notice to its employees. During the notice period employees were also made and/or asked to work overtime.
Class action lawsuit
A class action was brought on behalf of former employees. One of the issues at trial was whether or not the Form 1 was posted in time. However, the second issue proved to be more interesting, and revolved around whether an employer can be credited for providing notice while requiring employees to work overtime.
Section s. 17(1) of the ESA provides that “no employer shall require or permit an employee to work more than…48 hours in a work week” providing exceptions only if the employee has agreed in writing to work the additional hours and if the employer has obtained the approval of the Director to allow an employee to work more than 48 hours in a week.
Evidence at trial found that a group of production employees worked approximately 55 hours per week during the notice period. This extra work was done so that the employer would have a stockpile of inventory to sell after the closure of the plant. The employees performed this overtime work voluntarily, but the employer was still acting contrary to its obligations under the ESA. An additional 18 “key employees” also worked overtime, though these employees were forced to do so, with the employer telling them their job required them to stay and work overtime, and that they had no choice in the matter.
The motion judge ruled in favour of the employees on this point, finding that the employer should not be credited for providing notice during weeks in which employees were made to work overtime. The reason behind this is that the notice period is designed to provide employees with time to look for a new job. Someone working 12-16 hour days would have a hard time pursuing new employment during their non-working hours.
In their decision, the motion judge wrote:
“Take the extreme example of an employer in the position of (the employer) that had employees work 16 hours a day during their notice period in order to attain its corporate objectives. That employer surely could not claim credit for working notice. To do so would be tantamount to saying, “You had eight hours a day to look for new employment and if you frittered it away sleeping, that was your choice”.
The onus is on (the employer) to prove that it provided reasonable advance notice of termination. I have concluded that there is both a quantitative and a qualitative component as to what is “reasonable”. To look for work, an employee needs both a reasonable aggregate notice period and a reasonable amount of time in the week. Requiring or condoning employees to work in excess of ESA maximums was not only unreasonable, it was unlawful. (The employer) has not discharged its onus to prove that it provided for “reasonable” working notice during any week in which an employee worked in excess of ESAmaximums. It follows that (the employer) is not entitled to credit for working notice for any week in which a plaintiff, not exempt from the ESA overtime provisions, worked in excess of the maximums.
There will have to be an individual assessment as to whether any of the 18 employees referred to are exempt from the ESA overtime provisions. If any are exempt, I conclude that (the employer) is not entitled to credit for working notice for any week in which the overtime worked had a significant adverse effect on the ability of the employee to look for new employment. Being forced to work overtime to that extent renders the (employer’s) working notice unreasonable.”
The employer appealed on the grounds that the motion judge erred in considering the quality of the opportunity given to the employees to find new work, arguing “quality of the opportunity” is not a relevant factor in determining reasonable notice.
On appeal, the court rejected the employer’s position. The court agreed with the motion judge’s decision to consider the quality of the opportunity given to employees to find new jobs. The primary objective of the notice period is to provide dismissed employees with the opportunity to obtain alternative employment. The court was careful to point out that employees should still expect to work through notice periods, but that “exceptional workplace demands on the employee during the notice period that negatively affect his or her ability to seek alternate work, if not consensual, may warrant disentitling an employer to credit for some or all of the period of working notice provided. In my view, overtime worked in violation of the ESA constitutes such an exceptional demand and cannot be considered ‘consensual.’”
The court agreed with the motion judge’s decision on these issues, stating it could have been avoided had the employer obtained the written permission of production employees and key employees, the later of whom should also have had an option to work overtime rather than a requirement to do so.
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