In a number of provinces, legislators have enacted a precise definition of collective dismissal. In general, a collective dismissal will be triggered when a certain number of employees are dismissed within a given period of time specified by the legislation. In the event of a collective dismissal, an employer will have significant obligations that include giving a notice of collective dismissal or paying an indemnity in lieu of and equivalent to the notice.
The duration of the notice will vary based on the applicable legislation and on the number of employees affected. It is therefore crucial that the number in question be determined, since it will alter the employer's financial obligations.
But what about waves of collective dismissals that extend beyond the period specified in the legislation? Do they constitute a single collective dismissal or several independent collective dismissals? That is the question that the arbitrator, André G. Lavoie, answered in Syndicat des travailleurs et travailleuses d'Orica (CSN) and Orica Canada inc. (PDF - available in French only)
The issue in this case was how to interpret section 84.0.1 of Quebec's Act respecting Labour Standards ("LSA"), which defines the concept of collective dismissal, and, more specifically, how to calculate the two-month period referred to in that section.
From September 2012 to December 2013, the employer carried out five waves of collective dismissals. In total, 167 employees were dismissed. The employer paid each of the employees affected an indemnity equivalent to the notice applicable to collective dismissals of 10 to 99 employees.
The union argued that the employer had to pay an indemnity equivalent to the notice applicable to collective dismissals affecting 100 or more employees. The union submitted that where an employer dismisses ten or more employees within two consecutive months, the collective dismissal mechanism is automatically triggered and any subsequent dismissal must be included for the purpose of calculating the number of employees affected.
The employer argued the contrary: the number of employees affected has to be calculated over a fixed period of two consecutive months. Each subsequent wave of dismissals has to be calculated separately.
The arbitrator first reviewed the fundamental elements of the provisions and the requirements governing collective dismissals. The purpose of these provisions is to protect the affected employees from the difficulties related to finding new employment in a context where a large number of employees enter the labour market simultaneously.
On that point, the arbitrator noted that there are four conditions that need to be met for a situation to be characterized as a "collective dismissal" in Quebec:
- Ten or more employees are dismissed;
- The employees are actively working;
- The affected employees work in the same establishment;
- The dismissals take place over a period of two consecutive months.
In the arbitrator's opinion, the period of two consecutive months referred to in the LSA is not only the period that is necessary in order to trigger the various provisions governing collective dismissals, but also the reference period for counting the number of employees affected by the collective dismissal in question. In other words, when the legislator defined the concept of collective dismissal, it specified the period during which the number of employees affected must be counted.
The arbitrator therefore rejected the union's argument on the grounds that it would simply extend the notice period provided in the LSA.
Ultimately, the arbitrator found that dividing dismissals into waves can be done where the divisions are genuine and in no way artificial. In this case, the waves of dismissals had been divided over a period of more than 15 months due to market variations.
Key Points for Employers
This decision is of interest to any employer that must engage in collective dismissals. This decision puts an end to an interpretation that would have had serious consequences for employers and would have been difficult to manage from a human resources perspective. Had the arbitrator confirmed the union's interpretation, any dismissal following a collective dismissal, for an indefinite period of time, would have been considered in determining the notice to be given to the affected employees.
In conclusion, it is important to remember the arbitrator's words of caution: dividing waves of dismissals must not be artificial and done in a way to circumvent the provisions of the LSA. Therefore, it will be important to demonstrate the underlying rationale for dividing the dismissals, when applicable.