When an employee's employment is terminated, their entitlement to notice or pay in lieu of notice can come from three sources
Exclusive to Canadian HR Reporter from Rudner Law.
If you’ve been watching the news, you know that it’s ripe with reports of massive job cuts. This is not at all surprising. According to Statistics Canada, the Canadian economy shed 33,000 jobs in March 2025, which marks the largest job loss since January 2022.
As we have seen in recent years, many organizations go through regular downsizing, often resulting in mass terminations. What does this mean from an employment law perspective? What are mass terminations? Are the rules for mass terminations different from “regular” terminations? And if so, how do they differ?
Sources of entitlement upon termination
As a starting point, when an employee's employment is terminated, their entitlement to notice or pay in lieu of notice can come from three sources.
First, each jurisdiction has its own employment standards legislation setting out the minimum requirements that cannot be contracted out of, including an employee’s entitlements upon termination. The statutory entitlement to notice or pay in lieu of notice is based on the employee’s length of service.
Second, the employment agreement may contain a valid termination clause that limits the employee's entitlements to the statutory minimum or something more. That said, most employers do not have enforceable contracts in place and thus are unable to rely upon them to limit their potential liability.
Finally, the common law requires that “reasonable notice” or pay in lieu of notice be provided, based on factors such as the employee’s age, length of service, position, and the availability of comparable employment. The common law applies by default, and usually provides employees with entitlements that far exceed the statutory minimums.
As a result, without proper contracts in place, employers risk significant liability.
Mass termination rules
While each jurisdiction has its own employment standards legislation setting out the minimum requirements upon termination, special rules apply when it comes to mass terminations.
In every jurisdiction (except Prince Edward Island), when an employer dismisses a certain number of employees within a specific time period and within a certain geographic location, the employer is required to provide mass termination notice under the applicable minimum standards legislation.
In a mass termination, the amount of notice an employee is entitled to receive is typically determined by the number of employees whose employment is terminated, rather than by the employee’s period of employment.
An employer’s obligations with respect to mass terminations vary by jurisdiction, and may involve any one or more of the following:
- Providing written notice of the mass termination to the government, any affected union and the affected employees
- Posting requirements
- Providing the employee with a greater or additional amount of statutory termination notice
- Implementing a joint planning committee.
For example, pursuant to the Ontario Employment Standards Act, 2000 (ESA), a mass termination is considered to have occurred when the employment of 50 or more employees is terminated, the terminations occur at the employer's establishment, and the terminations occur within a four-week period. If all of these criteria are met, then the employer must provide employees with notice as follows:
- Eight weeks’ notice for 50 to 199 employees,
- 12 weeks’ notice for 200 to 499 employees, and
- 16 weeks’ notice for 500 or more employees.
There are exceptions to the mass termination rules depending on the jurisdiction. In Ontario, the ESA's mass termination rules do not apply if:
- the number of employees whose employment is being terminated represents not more than 10% of the employees who have been employed for at least three months at the establishment
- none of the terminations are caused by the permanent discontinuance of all or part of the employer’s business at the establishment.
If an employer can meet both requirements of the exception, then the termination of 50 or more employees within a four-week period will not trigger the mass termination provisions of the ESA. Instead of the mass termination rules, the notice period for each employee will be determined by their length of service, according to the individual notice provisions under the ESA.
Exceptions across Canada
Interestingly, while most jurisdictions provide employers with the option of providing working notice of termination, pay in lieu of notice, or a combination thereof, absent any agreement to the contrary, in Nunavut, the Northwest Territories and Yukon, the employer must provide working notice for the mass termination period and cannot provide pay in lieu of this notice.
The process of providing notice of mass termination also varies based on the applicable jurisdiction. In most jurisdictions, if an employer fails to provide proper mass termination notice to either the government or the employee, then the employer is required to give new mass termination notice to the employees, with no credit (for minimum standards purposes) for past notice.
Moreover, it is important to note that the case law interprets these mass termination rules, and that notice may be rendered ineffective if employees are not provided with a reasonable opportunity to find comparable employment during their working notice period or if the termination date is unclear.
Accordingly, it is critical that employers follow the special rules for mass terminations in their respective jurisdictions.
Key takeaways on mass layoffs
Before proceeding with any strategic business decisions, employers would be wise to consider the potential legal implications. Employers should tread the waters of terminations, and mass terminations in particular, very carefully.
The first step should be to seek legal advice from an employment lawyer, who can help guide you through the mass termination process and ensure that you are complying with the law. Otherwise, you could be on the hook for substantial liability for breaching the statute.
Additionally, during the working notice period, you should refrain from actions such as demanding excessive overtime or creating uncertainty around the termination date, which can impede an employee’s ability to secure new employment and thus render the notice ineffective.
An employment lawyer can also proactively help you implement robust contracts and policies that maximize your rights and flexibility while minimizing potential liability. Otherwise, you could be on the hook for substantial damages.
It’s important to remember that employment relationships are legal relationships, and while decisions like mass terminations may seem logical from a business standpoint, they have legal consequences. Ironically, though you may only be the messenger on the surface, you could end up paying more in severance than you save through these "cost-cutting measures”.
Nadia Zaman is a senior associate lawyer at Rudner Law in Toronto. She can be reached at (416) 864-8500 or [email protected].
