As we start a new year, it’s one of the most common times for an employer to review its structure, payroll, and overall organizational needs. While it’s no secret that many companies are doing mass terminations right now, a delicate trend that we are also seeing is mass terminations while simultaneously hiring new employees. This situation is not only challenging from a legal perspective but also from an employee morale standpoint. This blog post delves into Ontario employment law considerations surrounding terminating while also hiring.

Understanding Mass Terminations under Ontario Employment Law

Ontario’s Employment Standards Act, 2000 (“ESA”) provides the minimum legal framework for mass terminations. According to the ESA, a mass termination occurs when an employer terminates 50 or more employees at a single establishment within a four-week period. Employers are required to provide written notice to the Ministry of Labour, Training and Skills Development and to each affected employee.

However, the law becomes a bit murkier when an employer is simultaneously hiring new staff. The ESA does not explicitly address this scenario, so it is technically legal for an employer to fire and hire at the same time but it can often lead to confusion and potential legal disputes.

Employee Morale Considerations

Beyond the legal implications, mass terminations coupled with hiring new staff raise questions among employees. It can be perceived as unfair, leading to negative impacts on the company’s reputation and employee morale. Employers should strive to uphold fairness and transparency when making these difficult decisions. This includes clearly communicating the reasons for the mass termination, the selection process for layoffs, and the rationale for hiring new staff.

Navigating the Legal Landscape

Employers can take several steps to navigate the legal complexities of mass terminations while hiring:

• Fair Selection Process: The selection process for terminations should always be based on objective criteria, such as performance or seniority, rather than personal biases or discrimination.
• Fair Notice and Termination/Severance Pay: Employees being terminated should be offered reasonable notice and a fair termination and severance package. What is “fair” will vary by employee depending on their contract, and specifically their termination provision. If an employee is not capped at their ESA entitlements, they will be subject to common notice which depends are various factors.  

• Transparent Communication: Employers should strive to communicate openly and honestly with employees about the reasons for the mass terminations and new hires. This can help to alleviate concerns and maintain trust with your current workforce.

• Offer Support for Displaced Employees: Employers should provide support for displaced employees, such as outplacement services or assistance with job searches. This can help to soften the blow of the termination and demonstrate the company’s commitment to its employees.

• Ensure Ethical Hiring Practices: When hiring new staff, employers should ensure that the process is fair and transparent. This includes clearly communicating the job requirements and selection criteria, and treating all candidates with respect and dignity.

• Seek Legal Advice: Most importantly, given the complexities of Ontario employment law, we always recommend consulting with an employment lawyer before proceeding with mass terminations. This can help ensure compliance with the ESA and minimize the risk of legal disputes.

Mass terminations while simultaneously hiring new staff can be a legal minefield for employers. Do you have questions about your legal obligations? Get in touch for a consultation.