The introduction of full day kindergarten combined with boards of education providing before-and after-school care could result in centres having to close down playrooms for four- and five-year olds. As employment costs are by far the most significant cost component of any childcare program great care must be taken when making changes to staff.
We often get questions on the financial implications of laying off staff. We have also observed that mistakes made in this area can be very costly. Getting professional advice is almost always a must before initiating any staff reductions for cause or otherwise.
In unionized centres, the extent of the employer's obligations to provide notice and/or severance pay and who may be selected for the layoff will likely be governed by a collective agreement, which may or may not be limited to the notice requirements under the Employment Standards Act, 2000. Depending on the agreement, there may also be a positive obligation to advise and consult with the union in relation to a permanent lay off of some staff or closure of the centre.
In non-unionized centres, the requirement to provide notice of termination and/or severance pay may be governed by an enforceable employment agreement (if the employee has one) or by the common law. As part of those requirements, the centre will have to meet the minimum statutory requirements under the Employment Standards Act, 2000. It is important to establish a process early on and very clearly document considerations that will lead to a proposed change in the duties, a temporary lay-off, or a termination. If the process is followed and bona fide considerations well documented, the employer will be better able to address an allegation of constructive dismissal or an allegation that it has failed to honour its obligations under the Human Rights Code.
The specific obligations will always depend on individual circumstances of the centre's and the employee(s) in question.
While a centre may be able to provide working notice to affective staff, doing so may also have practical implications on the day-to-day operations of the centre and these will need to be considered beforehand.
The Ministry of Labour's web-site provides information on minimum statutory obligations under the Employment Standards Act at the following link: http://www.labour.gov.on.ca/english/es/
Please keep in mind that compliance with the minimum legislated requirements in either a union or non-union workplace may not satisfy broader contractual obligations that may come into play when there is a permanent layoff (termination of employment).
We contacted Ian Werker, a lawyer with much experience in the field of labour law in childcare in Toronto, to answer some frequently asked questions on the subject of permanent layoffs in a daycare environment. http://www.lawchambers.com/Lawyers/Ian_Werker.htm.
The following comments pertain only to non-share capital companies incorporated under the Ontario Corporations act.
Who is liable for providing notice and/or compensation in lieu of notice (including statutory amounts)?
The centre is liable for the payment of wages. It is also liable to provide notice required under the contract of employment (or collective agreement if one exists). Where there is no specific agreement in place, the amount of notice required will be determined by the common law.
Where the employer has not given working notice of termination, it will generally be liable to provide compensation in lieu.
Even if an employer has given some amount of working notice, it must at least pay out any remaining amounts required under the Employment Standards Act, 2000. Again, depending on the specific contractual arrangements, satisfying the statutory requirements will probably not meet the employer's broader common law obligations to provide notice or pay in lieu of notice.
When must you pay termination pay under the ESA?
Generally speaking payments on termination must be made under the ESA on or before the regular payroll date following the employee's last day of work. However, employers and employees will often enter into mutually agreeable arrangements where payments to the employee shall be made by way of a "salary continuance".
What are the guidelines for how much termination pay must be paid or time in lieu of notice given?
In a non-union environment, or in cases where the entitlement is not governed by an enforceable written agreement, our courts look at the individual circumstances of the employee(s) involved, based on relevant factors – such as the person's age, duration of service, and position. Where a termination involves a number of employees at once, employers should get legal advice so that they can establish an approach that is internally consistent and within the range of what a court is likely to determine as reasonable. Readers should be aware that, as far as courts are concerned, there is no "general rule" that an employee should receive a "month of notice/severance for each year of service". In some cases the ratio is more. In others it will be less.
Are directors and officers personally liable for statutory termination pay, statutory severance pay or pay in lieu of notice?
No. But, they may be liable for unpaid vacation pay or wages earned.
There are a few critical messages to keep in mind in this area.
First, the rules governing severance, termination pay and notice in lieu of pay are complex and depend on the specifics of your centre's situation.
Second, if your centre plans to lay off a number of long standing employees as a result of having to close a playroom, it should do so only after careful planning and professional advice so that the centre is best-placed to meet its legal obligations and reduce the risk of surprise claims that could put the centre's future financial viability into question.