Cuts, Lay-offs, and Terminations: Employee Rights Under Austerity

Big changes are coming to Ontario. In recent months, families have been hit with wave after wave of bad news from the provincial government. From cuts to autism funding for students and children, to funding cuts for education, and cuts to library services, Ontarians are being told to tighten their belts and to brace for austerity. Ontario is now “open for business” and cuts and lay-offs are on the way.

Whatever your political stripe, it’s clear that recent changes to provincial funding and the provincial budget will be difficult. Unfortunately for us however, the changes aren’t done. Most recently, the Ontario Government announced that it would be eliminating 25 public health units reducing the number of units in the province from 35 to 10, while at the same time reducing provincial funding for the health departments themselves. Even ignoring the obvious impacts that these types of cuts will have on communities, it’s clear that this change will be painful for many. Combine this with funding cuts to school boards and there is a near guarantee that many public employees will be at risk of job loss.

While job loss is often challenging and stressful, it’s important to be prepared for these outcomes and to understand what your rights are when talking about termination, wrongful dismissal, restructuring, lay-offs, notice, and severance.

Severance:

Many people take severance to mean the compensation that they’ll receive upon their termination. People think “if I’m terminated, then I get severance”. That’s wrong. Firstly, the word “severance” itself is a specific legal term defined in the Employment Standards Act (the “ESA”). Under this definition, severance is only available to individuals employed within a sufficiently large workforce with a sufficiently large payroll. Molyneaux Law previously wrote about severance pay in an earlier blog post.

Termination and Notice Pay

If your employment is terminated without cause in the province of Ontario, you will most likely be entitled to termination pay. Termination pay is provided to employees who have been employed for a minimum of 3 months and is equal to one week of pay per year of service up to a maximum of 8 weeks. Instead of providing a single payment, employers are generally allowed to offer termination pay as working notice. In other words, and instead of opting to pay you, your employer could have you work the number of weeks of your termination pay. Employers may also provide some combination of a lump sum payment together with working notice.

Lay-Offs

When governments and large public sector organizations such as school boards and health departments lose funding, the word “restructuring” won’t be too far behind. As public agencies begin to restructure in response to budget changes, the word “lay-offs” may also enter the discussion. Under the ESA, employers are entitled to temporarily lay-off employees for a period of up to 13 weeks. Normally however, if your contract does not contain specific language about this right, there’s a good chance that your employer can’t lay you off. Secondly, even where your contract grants your employer the ability to lay you off, special questions arise when lay-offs extend beyond 13 weeks in any 20-week period. In those circumstances, an employer is required to comply with additional requirements under the ESA such as a requirement to provide supplementary unemployment benefits to those employees who are laid-off. Failure to provide these additional benefits may entitle you to claim that you have been terminated from your employment.

Consider Your Contract

A notice of lay-off or termination should always be viewed alongside an individual employee’s contract of employment. While notice pay and severance pay may be required under the ESA, the language of your contract, (or the language that’s missing from your contract) may allow you to seek additional rights and entitlements. In fact, an employee may be entitled to pursue a claim for “reasonable notice” in court which can result in an award which is greater than the combined severance and termination requirements under the ESA. Where there is no contract of employment, an employee’s ability to claim for “reasonable notice” should almost certainly be explored.

What about Unions?

If you are unionized and a member of a bargaining unit, then your rights with respect to lay-off or termination under the ESA are still generally applicable. How those rights are applied however, will normally be governed by your collective agreement. As a result, in these circumstances it is best to approach your union, business agents, or union stewards to discuss your options.

Going Forward

As Ontario moves into this new period of austerity, it’s important to consider your options and to ask questions. “Can my employer lay me off?”, “how can restructuring affect me and my rights as an employee?”, “what are my entitlements and what can I do if I’m terminated after all of these changes?”; these are all important questions that should be asked. However, the answers to these questions will depend on different factors including your contract, the length of your employment, the type of work that you perform, your age, the job market, and of course any changes that may be made to the actual laws like the ESA. At the end of the day, careful analysis of these elements is critical and will help employees determine the best course of action following a change to their employment.