Another One Bites the Dust – Mass Closures and Employer Responsibilities to Employees

Another large fashion retailer has fallen out of style with consumers, closing its doors for good across Canada. Last Sunday, Bradley Sell, the Chief Financial Officer of the Canadian subsidiary Forever XXI ULC (“Forever 21 Canada”), announced that all 44 of its Canadian stores would be closing. Sell cited economic viability as the primary reason for the Canadian closures. Approximately 2,000 employees will lose their jobs as a result. The Ontario Superior Court has granted the company protection from its creditors under the Companies’ Creditors Arrangement Act (CCAA).

ESA Requirement Upon Mass-Termination

While filing for bankruptcy can offer an employer an opportunity to restructure its operations without the looming specter of insurmountable debt, bankruptcy is not a “get out of jail free card” for employers.  In Ontario, under the Employment Standards Act (the “ESA”) employers must provide enhanced benefits to employees who have been terminated via a “mass termination.”

Section 58(1) of the ESA defines a mass termination as a termination wherein more than 50 employees of an establishment are terminated within a four-week period. An establishment can include more than one retailer location and the four-week period is a window of time that begins the moment the establishment terminates 50 or more employees.

The employer must provide the Ministry of Labour (the “MOL”) with notice of the mass termination via a Form 1. The notice of termination period begins the moment the Director of Employment Standards of the MOL receives the Form 1, as such late filing of the Form 1 will have cost implications for the employer. The employer must post a copy of the Form 1 in a visible area of the workplace beginning on the first day of the notice period.

Notice entitlements will depend on the number of employees terminated. Section 74.11 4.3 of the ESA sets out the required notice period based on the number of employees terminated:

  • 8 weeks’ notice if 50 to 199 employees are to be terminated;
  • 12 weeks’ notice if 200 to 499 employees are to be terminated; and
  • 16 weeks’ notice if 500 or more employees are to be terminated.

The notice provided can be in the form of working notice or it can be pay in lieu of notice, where the employees stop working but get paid for the notice period. 

What about Severance?

Employees with more than 5 years of service with the employer will be entitled to severance pay, in addition to notice of termination, if they are terminated because of a “permanent discontinuance.” In mass termination situations, the severance entitlement is triggered even if an employer does not have a payroll of $2.5 million or more.

Final Thoughts

Even with the protections for employees provided by the ESA, it is undeniable that these mass-terminations have a considerable impact on workers in the retail industry.  Many stores are disappearing from the retail landscape – Gymboree and Payless Shoe Source also filed for bankruptcy this year – and it is very likely that we will continue to see this trend of closures as consumer trends shift away from “fast fashion” and more people use online platforms to source goods. 

If you have been involved in a mass termination or are just interested in learning more, we invite you to explore our So You’ve Been Fired e-book or get in touch!

Share the Post:

Related Posts

Canadian flag displayed in front of a government building, representing proposed federal labour law reforms under Bill C-39 and changes to the Canada Labour Code.

Federal Bill C-39: Major Changes Proposed for Federal Labour Relations 

Federal Bill C-39 proposes major changes to the Canada Labour Code that could reshape labour relations for federally regulated employers and unions. From expanded government intervention during strikes and lockouts to new collective bargaining rules and mediation processes, these reforms may significantly impact workplace disputes, collective agreements, and the balance between protecting workers’ rights and the national economy.

Read More »
Person working remotely on a laptop beside a swimming pool, illustrating remote worker management, employee accountability, and flexible work arrangements.

Remote Worker Management: Accountability without Constant Check-Ins 

Managing a remote team doesn’t require constant check-ins. Effective remote worker management comes from clear expectations, transparent systems, and trust. Learn how to create accountability, improve collaboration, and measure results without micromanaging employees. Discover practical strategies to build a productive remote workforce that stays aligned, engaged, and focused on outcomes rather than online presence.

Read More »
Mountain village with wooden buildings overlooking a valley, representing workplace accommodations that can evolve while supporting long-term stability and growth.

Can An Employer Change An Accommodation? 

Can an employer change a workplace accommodation once it has been in place for years? A recent Ontario court decision confirms that accommodations are not necessarily permanent. Employers have flexibility to modify accommodations when employees remain reasonably accommodated and free from discrimination. Learn what this ruling means for disability accommodation, workplace management, employee benefits, and legal compliance.

Read More »

Contact Us

Thank You For Your Interest. Kindly Complete The Form Below. Our Client Services team will be in touch with further information about our fees and intake process.
[grow-contact-form]