Mar 18, 2016

The “Bottom Line” of Restructuring

In today’s shifting economy, restructuring is common amongst large and small employers. Restructuring may involve shifting employees within a company, but more commonly it also involves the elimination of various sectors of an employer.

For an employee, the stress of a restructuring can be lessened by understanding the employer’s obligations.

Notice or Pay

If an employee is fired as part of a restructuring, she may be entitled to notice of termination, termination pay, severance pay or additional pay in lieu of notice.  How much notice or pay can typically be determined through three questions: Is there an employment contract with a termination clause? What are the employee’s right under the Employment Standards Act?  Does the employee have any right to additional notice or pay under the common law?

If the employee has an enforceable contract with a termination clause, that will determine what pay or notice the employee receives.  Otherwise, the employee may be able to receive as much as one month per year of service worked for the employer.  This will depend on the employee’s age, education, experience, and length of service. It may also be affected if the employee finds another job.

Mass Lay-off

The assessment above is different if the restructuring involves a mass termination.  If more than 50 employees are laid off or terminated, the employee should receive at least eight weeks’ notice or pay in lieu – even if her contract states she should receive less.

If more than 200, or more than 500, employees are terminated at the same time the minimum notice requirements increase respectively.

An example

Josh has worked for his employer for two years and his contract states that he will receive two weeks’ notice per year of service. His company restructures and terminates 75 employees.  If Josh was the only employee terminated, he would only receive four weeks’ notice or pay.  However, in this mass termination, he will receive at least eight weeks’.

Change in Job

It is not uncommon for some employees to remain employed during restructuring, but to be offered different compensation or different roles.  If the change is significant, this may result in a constructive dismissal.  For more information about what constitutes a constructive dismissal, see here.

If you think that your employer will be restructuring, or you have been laid-off or terminated, feel free to speak with one of our lawyers who has expertise in this area, at [email protected] or 647-204-8107.


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