In certain Canadian jurisdictions, when conducting a collective dismissal or mass termination, an employer has significant obligations that include giving increased notice of the collective dismissal or providing payment in lieu of and equivalent to that notice.
In a number of Canadian provinces, legislators have enacted a precise definition of 'collective dismissal'. In general, a collective dismissal occurs when a certain number of employees are dismissed within a period specified by the legislation.
The length of the notice period, and therefore the amount of the employer's financial obligation, will vary based on the applicable legislation and the number of employees affected; it is therefore crucial to determine this number.
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? In Quebec, this question was answered by the arbitrator André G Lavoie in Syndicat des travailleurs et travailleuses d'Orica (CSN) v Orica Canada Inc.
The issue in this case was how to interpret Section 84.0.1 of the Quebec Labour Standards Act, which defines collective dismissal and, more specifically, how to calculate the two-month period to which the section refers.
Between September 2012 and December 2013, the employer carried out five waves of collective dismissals. In total, 167 employees were dismissed. The employer paid each of the affected employees an indemnity equivalent to the notice required by the statute when a collective dismissal of between 10 and 99 employees occurs.
The union argued that the employer had to pay an indemnity equivalent to the notice required when a collective dismissal of 100 or more employees occurs. The union argued that when an employer dismisses 10 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: that the number of employees affected must be calculated over a fixed period of two consecutive months and that each subsequent wave of dismissals must 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 difficulties relating to finding new employment in a context where many employees enter the labour market simultaneously.
The arbitrator noted that the following four conditions must be met in order for a situation to be characterised as a 'collective dismissal' in Quebec:
- 10 or more employees are dismissed;
- the employees are actively working;
- the affected employees work for the same establishment; and
- the dismissals take place over a period of two consecutive months.
In the arbitrator's opinion, the period of two consecutive months to which the act refers is not only the period that is necessary 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. When the legislators defined the concept of collective dismissal, they 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 extend the notice period provided in the act. Ultimately, the arbitrator found that dividing dismissals into waves could be permitted as the division was genuine and in no way artificial. In this case, the waves of dismissals had been divided over a period of more than 15 months because of market variations.
This decision is of interest to any employer in Quebec that carries out collective dismissals.
The decision rejected an interpretation of the statute that would have had serious consequences for employers and posed difficulties 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.
However, it is important to remember the arbitrator's warning: that the division of waves of dismissals must not be artificial or have been done in order to circumvent the provisions of the act. As such, it will be important for an employer to demonstrate the underlying rationale for dividing the dismissals.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
For further information on this topic please contact Paul Côté-Lépine at Fasken Martineau DuMoulin LLP by telephone (+1 604 631 3131) or email (email@example.com). The Fasken Martineau DuMoulin LLP website can be accessed at www.fasken.com.