Me Marie-Michelle Savard
A partner at Verreau Dufresne Avocats, Marie-Michelle Savard focuses her practice on labour law, representing businesses and individuals with rigour and a personalized approach. With litigation experience before several provincial and federal tribunals and courts, she stands out for her analytical mind, rooted in her scientific training, and her ability to find practical solutions to complex issues.
View profileBook an appointmentWhat procedure must businesses follow to carry out a collective dismissal? What is the difference between a dismissal for economic reasons, a dismissal for cause and a layoff? What are the employer’s obligations? Our labour lawyers in Québec City and Lévis explain the specific features of a collective dismissal, which is generally used as part of a business restructuring.
Collective dismissal: definition
The Act respecting labour standards defines a collective dismissal as an employer’s termination of the employment of 10 or more employees of the same establishment over a period of 2 consecutive months, or the layoff of at least 10 employees of the same establishment for 6 months or more.
The law allows the employer to dismiss employees for reasons such as organizational ones, for example in the case of an administrative reorganization or a business restructuring involving the elimination or merger of positions.
The concept of establishment
The concept of an establishment is not defined in the Act respecting labour standards. Each business’s situation must be analyzed individually, since an establishment, in the context of a collective dismissal, is not necessarily limited to the idea of a “building” or a “civic address.” In fact, several buildings could be considered a single establishment within the meaning of the definition of collective dismissal.
Exceptions
The mechanism set out in the Act respecting labour standards does not apply to all of a business’s workers. In particular, it does not apply to employees with less than 3 months of continuous service, to employees whose fixed-term contract expires or whose contract for a specific undertaking expires, to employees who have committed a serious fault, or to the business’s senior managers.
In addition, the division of the Act respecting labour standards on collective dismissals does not apply in the following cases:
- A layoff of employees for an indefinite period, but of less than 6 months;
- An establishment whose activities are seasonal or intermittent;
- An establishment affected by a strike or lockout within the meaning of the Labour Code.
Some collective agreements may also impose requirements in addition to those of the Act respecting labour standards. These distinctions are important because the number of employees affected by the collective dismissal determines the collective dismissal notice.
The employer’s obligations
An employer who wants to carry out a collective dismissal must meet a series of requirements.
First, it must give a notice of collective dismissal.
The employer must make sure to pay the dismissed employees all amounts owed: wages, overtime and vacation pay.
In addition to the notice of collective dismissal, the employer must give an individual notice of termination of employment to each employee affected by the dismissal.
The procedure to follow
The Act respecting labour standards sets out the procedure and the deadlines for sending the notice of collective dismissal. The deadlines depend on the number of employees affected by the dismissal. For 10 to 99 employees, the notice period is 8 weeks; for 100 to 299 employees, it is 12 weeks; and for 300 or more employees, it is 16 weeks.
Before carrying out a dismissal for technological or economic reasons, the employer must send the notice of collective dismissal to the Minister of Employment and Social Solidarity within the deadlines mentioned above. At the request of the Commission des normes, de l’équité et de la santé et de la sécurité du travail (the “CNESST”), the Minister of Labour must provide it with any notice of collective dismissal. To be valid, the notice of collective dismissal must contain certain information, and it must be posted in a visible and easily accessible place in the establishment where the dismissed employees work. If changes need to be made to the notice of collective dismissal, for example if the number of employees affected changes, the employer can simply update the notice without starting the whole process over.
During the notice period, the employer cannot change the wages or the group insurance and pension plans of the affected employees without their consent.
If 50 or more employees are affected by the collective dismissal, the Minister of Labour may ask the employer to set up a job placement assistance committee. The employer and the certified association, if any, or the representatives chosen by the employees affected by the collective dismissal must form this committee and cooperate in carrying out its mission.
Notice of termination of employment
In addition to the notice of collective dismissal, the employer must give each affected employee a notice of termination of employment.
Collective dismissal indemnity
If the employer fails to give the notice of collective dismissal within the time limits set by law, or fails to give it at all, the employer must pay each affected employee a compensatory indemnity. This indemnity is equal to the employee’s regular wages for the entire notice period that was not given, or for the remainder of the period corresponding to the delay in giving notice.
The collective dismissal indemnity does not take overtime into account, and the employer must pay it:
- At the time of the dismissal;
- Or at the end of a 6-month period, in the case of a layoff for an indefinite period;
- Or at the end of the period initially planned, in the case of a layoff initially planned for less than 6 months that in fact lasts longer.
However, the collective dismissal indemnity cannot be combined with the indemnity in lieu of notice of termination of employment. The employer must pay the affected employee whichever of the amounts they are entitled to is higher.
In the case of superior force, or when an unforeseen event prevents the employer from meeting the notice deadlines, the employer will not have to pay the compensatory indemnity.
Differences between a dismissal for economic reasons, a layoff and a dismissal for cause
In a collective dismissal, the employment relationship between the employer and the employees is ended for economic, technical or organizational reasons. Examples include merged positions, financial difficulties, a business reorganization or an unexpected event such as a pandemic, all of which can lead to a collective dismissal.
Unlike a dismissal for economic reasons (licenciement), where the employment relationship is ended permanently for reasons related to the business or for external reasons, in a dismissal for cause (congédiement), the employer voluntarily decides to end the employment relationship with an employee for reasons specific to that employee (misconduct, incompetence, etc.).
By contrast, a layoff (mise à pied) is a temporary suspension of the employment relationship between the employer and the employee. The employee is expected to be recalled to work.
What if there is a complaint?
Employers must be careful. A collective dismissal must not be an indirect way of dismissing an employee for cause, which is known in law as a disguised dismissal. In the event of a dispute, the courts will therefore analyze the employer’s reasons for the dismissal. The burden of proof therefore rests on the employer, who must show that it considered objective factors when it decided to dismiss for economic, technical or organizational reasons. Objective factors include, in particular, the employees’ performance, versatility, skills and seniority.
Contact us
A collective dismissal is a delicate and demanding process. It is therefore important to get advice from a labour lawyer to avoid paying fines or a compensatory indemnity to employees. If you have any questions about your obligations in this area, we invite you to contact the labour lawyers at Verreau Dufresne Avocats right away.
Note: The information above is general in nature and does not constitute legal advice. For advice on your particular legal situation, feel free to contact one of our lawyers in Québec City or Lévis.
