Mass Termination Rules and Employee Rights in Alberta
A mass termination can leave dozens or some times hundreds of employees looking for work at the same time. Whether an employer closes a single location, eliminates a business unit or restructures its workforce, affected employees may have rights to written notice, termination pay, continued benefits and additional compensation.
The rules governing a mass termination in Alberta are found in the province’s employment standards legislation. However, the minimum requirements under the Employment Standards Code do not necessarily determine an employee’s complete entitlement. In many cases, an employee may qualify for substantially more compensation under their employment contract or the common law.
Employees should obtain legal advice before signing a release or accepting a severance package. TZ Law represents employees affected by layoffs, business closures, corporate restructuring and large-scale workforce reductions throughout Alberta.
What Are Mass Terminations?
A mass termination, also called a group termination or mass layoff, generally occurs when an employer terminates 50 or more employees at a single location within a four-week period. In that situation, special notice requirements apply under Alberta’s Employment Standards Code.
Mass terminations may result from:
- The permanent closure of a business;
- Closure of an office, store, plant or other single location;
- Corporate restructuring;
- Insolvency or financial difficulties;
- A merger or acquisition;
- Outsourcing;
- Relocation of business operations;
- Technological change or automation;
- Elimination of a department;
- Reduced demand for products or services; or
- Other reasons requiring a significant workforce reduction.
A group termination is different from an ordinary termination because a large class of employees loses employment within a concentrated period. However, each employee’s right to termination pay, severance pay and other compensation must still be assessed individually.
The term “mass layoff” is sometimes used even when the termination is permanent. This differs from a temporary layoff, under which the employment relationship may continue while the employee is temporarily laid off.
For further information about different types of layoffs, visit TZ Law’s Calgary layoff lawyer page.
Special Notice Requirements for Group Terminations
Under Alberta’s Employment Standards Code, an employer intending to terminate 50 or more employees at a single location within a four-week period must generally provide written notice to the Minister responsible for employment standards.
Employers must ordinarily provide the group termination notice at least four weeks before the first termination takes effect. If four weeks of notice is not reasonably possible, the employer must provide written notice as soon as reasonably practicable.
The notice provided to the government may include:
- The number of affected employees;
- The dates on which employment will be terminated;
- The location where the employees work;
- The reasons for the group termination; and
- Other information required under the applicable rules.
The group notice provided to the government does not replace the employer’s obligation to give proper individual notice or termination pay to each eligible employee.
In most cases, employers must ensure employees receive at least their minimum entitlement under the Employment Standards Code. The applicable notice or pay in lieu generally depends on how long the employee has worked continuously for the same employer.
Unlike some Canadian jurisdictions, Alberta does not generally provide affected employees with an automatic additional eight, 12 or 16 weeks of group notice simply because they were part of a mass termination.
Employees may still be entitled to compensation under:
- The Employment Standards Code;
- Their employment contract;
- A collective agreement; and
- The common law.
Depending on the circumstances, termination compensation may include:
- Statutory termination pay;
- Pay in lieu of notice;
- Salary;
- Vacation pay;
- Bonuses;
- Commissions;
- Pension contributions;
- Health and dental benefits;
- Disability and life insurance benefits;
- Stock options or restricted share units; and
- Other regular forms of compensation.
Employees should also determine whether the employer has complied with the rules governing temporary layoffs and recall notices. Alberta’s temporary layoff period is generally limited, subject to statutory exceptions and different rules under some collective agreements.
If an employee is not recalled within the permitted period, the employment may be considered terminated and termination pay may become owing. A person who receives a recall notice should carefully review the proposed return date, duties, location, compensation and any changes to the job.
Refusing a valid recall notice may have consequences. However, legal issues may arise where the employer offers reduced pay, materially different responsibilities or a different work location.
Employees should obtain legal advice before refusing a recall request or treating a temporary layoff as constructive dismissal. Additional details are available on TZ Law’s layoff lawyer page.
Common Law Severance and Mass Layoffs
Employment standards legislation establishes minimum termination pay rules. It does not necessarily determine the full severance pay owed to an employee after a mass layoff.
Unless an enforceable employment contract lawfully limits the employee’s entitlement, a non-unionized employee may qualify for common law reasonable notice. This entitlement can be substantially greater than the minimum notice required under the Employment Standards Code.
When determining reasonable notice, courts may consider:
- The employee’s age;
- Length of service;
- Character of employment;
- Seniority and level of responsibility;
- Specialized skills and experience;
- Total compensation;
- Availability of comparable employment;
- Local labour market conditions;
- Whether the employee was recruited from secure employment; and
- Other circumstances affecting the search for a new job.
There is no automatic formula based solely on years of service. Two employees terminated by the same employer on the same day may be entitled to different amounts of compensation.
A mass layoff may make it more difficult for affected employees to find comparable work because many people with similar experience enter the labour market at the same time. For example, the closure of a major business in a smaller Alberta community may leave many employees competing for a limited number of jobs.
A mass termination does not automatically increase reasonable notice by a fixed amount. However, the availability of comparable employment is relevant when courts determine an employee’s common law entitlement.
A severance review should consider the employee’s complete compensation package rather than base pay alone. Depending on the contract and compensation plans, severance may include:
- Base salary;
- Regular overtime;
- Commissions;
- Performance bonuses;
- Health and dental benefits;
- Disability and life insurance coverage;
- Pension or RRSP contributions;
- Car or phone allowances;
- Stock options;
- Restricted share units;
- Vacation pay; and
- Other regular benefits.
Employees can review TZ Law’s guide to severance pay in Alberta and its termination and severance pay lawyer page for further information.
Employees seeking common law compensation also generally have a duty to make reasonable efforts to find comparable employment. This is known as the duty to mitigate.
Reasonable mitigation efforts may include:
- Updating a résumé and professional profile;
- Searching for comparable job opportunities;
- Applying for suitable positions;
- Contacting recruiters;
- Attending interviews;
- Networking within the employee’s industry;
- Considering reasonable retraining; and
- Maintaining records of the job search.
Employees do not usually have to accept the first available job, a substantial demotion or work that is materially different from their previous employment.
The employer generally bears the burden of showing that the employee failed to make reasonable efforts and that suitable work would probably have been obtained. TZ Law’s article on the duty to mitigate provides further information.
Human rights legislation also continues to apply during a mass termination. An employer cannot select employees for termination because of disability, age, pregnancy, family status, race, religion or another protected ground.
Concerns may arise where the affected workforce disproportionately includes:
- Employees on medical leave;
- Employees requiring accommodation;
- Pregnant employees;
- Employees on maternity or parental leave;
- Older employees;
- Employees who recently made a human rights complaint; or
- Employees who requested workplace accommodation.
An unfair termination is not automatically discriminatory. There must generally be a connection between a protected characteristic and the termination. Employees with concerns about discriminatory treatment can review TZ Law’s human rights lawyer page.
Can Employees Bring a Class Action?
Employees may be able to bring a class action where a mass termination creates common legal or factual issues affecting an identifiable group. However, a group termination does not automatically qualify for class treatment.
A class proceeding may be appropriate where affected employees share a dispute involving:
- The same standard-form employment contract;
- A common termination clause;
- A company-wide severance policy;
- Failure to comply with group termination rules;
- A uniform bonus or commission plan;
- Unpaid wages or vacation pay;
- Common treatment of stock-based compensation; or
- The same alleged breach of employment standards legislation.
The class action process generally requires an identifiable class, common issues and a workable method for resolving those issues in one proceeding.
A class action may be less suitable where each employee’s claim requires a separate assessment of:
- Age;
- Length of service;
- Position;
- Compensation;
- Contract language;
- Representations made during hiring;
- Mitigation efforts; and
- Availability of comparable employment.
Even where a class action is not appropriate, affected employees may be able to coordinate their claims, share evidence or pursue separate wrongful dismissal claims arising from the same workforce reduction.
Further information is available on TZ Law’s Class Action and Mass Terminations page.
Employees who believe they were terminated without proper notice or adequate compensation may also have a wrongful dismissal claim.
Affected by Group Terminations in Alberta? Our Lawyer Can Help
Employees affected by group terminations may be dealing with lost income, cancelled benefits, career uncertainty and pressure to sign a release quickly. The fact that many employees were terminated at the same time does not mean they all have the same legal entitlement.
Before accepting a severance offer, employees should:
- Request the termination letter, severance proposal and release;
- Locate the employment contract and compensation policies;
- Preserve pay statements, bonus plans and benefit records;
- Determine whether the layoff is temporary or permanent;
- Confirm when benefit coverage will end;
- Apply for Employment Insurance where appropriate;
- Document efforts to find another job;
- Monitor legal and employment standards deadlines; and
- Obtain legal advice before signing a release.
TZ Law can assist by:
- Reviewing termination and layoff documents;
- Determining whether Alberta’s group termination rules apply;
- Assessing whether the employer provided proper notice;
- Calculating statutory termination pay;
- Evaluating common law severance pay;
- Reviewing bonus, commission and benefit entitlements;
- Assessing temporary layoff and recall notice issues;
- Identifying possible constructive dismissal;
- Evaluating wrongful dismissal claims;
- Advising on human rights concerns;
- Determining whether a class action or coordinated process is appropriate;
- Negotiating improved compensation; and
- Starting a legal claim where a reasonable resolution cannot be reached.
Each employee’s circumstances must be considered separately. The fact that one person accepts a severance package does not determine what another affected employee is entitled to receive.
Learn more through TZ Law’s employment law services for employees or contact our employment lawyers for advice following a mass termination, group layoff or temporary layoff in Alberta.
