Guide to Restructuring a Cross-Border Workforce

In Canada, the concept of “redundancy” does not exist.

Instead, employment standards statutes across Canada provide for “layoffs” when dealing with temporary periods during which employers are unable to provide work to employees. However, there is no common law right to a layoff. Employers must reserve the right to make temporary layoffs by way of agreement, which should be express, for example in the context of an employment agreement. Absent an agreement to the contrary, a unilateral layoff by an employer would be considered a substantial change in the employee's employment and would be grounds for a constructive dismissal claim.

Where a layoff right is properly reserved, it enables an employer to lay an employee off work for a limited period (the amount of which varies across each Canadian jurisdiction), typically without terminating the employment relationship. If, however, the layoff is expected to be permanent, or extends beyond the allowable temporary layoff period, the layoff will be deemed to be a termination, and termination entitlements will be owed.

Yes, there is. An employee is redundant if the following conditions are met:

• the employer adopted a decision on organisational change;
• the change concerns the scope of activities, tasks, technical equipment, number of employees, or otherwise alters the structure of the employer;
• the aim of the change is to increase work efficiency, reduce costs, or otherwise alter the performance of the employer’s enterprise; and
• as a result, the employee’s work is redundant or not needed.

According to case law, the employee’s work is not needed, either at all or at least in part, with the rest being distributed among the current employees or corporate body. Rebranding the position, hiring a new employee to carry out the work of the dismissed employee shortly thereafter, or otherwise fabricating the redundancy with an ulterior motive does not qualify as redundancy.

Czech law provides two other similar reasons based on which an employer is entitled to terminate employment – closing down or relocation of the employer’s undertaking or its part. Together with redundancy, these three reasons are known as “organisational reasons” (in Czech: “organizační důvody”) for termination of employment. However, closing down and relocation of the employer or its part are different reasons than the redundancy itself, and therefore we do not address them further.

To temporarily lay off an employee in Canada based on a shortage of work or other economic reasons, employers generally must provide formal notice to the affected employees. Once on a temporary layoff, the employee is not entitled to pay as the employment relationship is effectively paused. The employer can then formally recall the employee back to work at any time before the end of the applicable jurisdiction’s statutory layoff period. If the employee is recalled within this period, then the employment relationship generally continues. If the employee is not recalled within the statutory layoff period, they are considered dismissed, and termination and severance entitlements would follow. How long employers have before an employee’s temporary layoff becomes a deemed termination varies across jurisdictions.

In Ontario, where the employer has reserved the right to lay off employees, temporary layoffs can last up to 13 weeks within 20 weeks without payment or the provision of benefits, or up to 35 weeks within 52 weeks only in certain circumstances, such as if the employee continues to receive substantial payments or benefits.

In Quebec, after six months of a continuous layoff, the employee is considered to be on “permanent layoff”, and is thus considered to be dismissed. “Permanent layoff” refers to the definitive termination of employment for economic, organisational or technical reasons. Such terminations are made following the abolishing of a position; a restructuring or reorganisation is considered a permanent layoff.

When terminating an employee in Canada, remember that the concept of “at-will” employment does not exist. Each termination will turn on its own set of facts. Unless a non-unionised employee acts in a manner that would constitute “just cause” (or “serious reason” in Quebec) for termination (which is a very high legal threshold that is only narrowly applied), the employee is terminated without cause and given their termination entitlements, even if there is good reason for their termination.

With Cause (Common Law and the Employment Standards Act (ESA)

Across the common law jurisdictions, including Ontario, to establish just cause for dismissal at common law, employers must be able to prove that the employee's misconduct was so serious it led to the total breakdown of the employment relationship, evaluated in the full context of the surrounding circumstances. However, under the ESA, an employee will not be entitled to notice or termination pay or severance pay where they engage in "willful misconduct, disobedience or willful neglect of duty that is not trivial and that has not been condoned by the employer", which Ontario courts have confirmed represents a higher standard than that for just cause at common law. This means that while an employer may have just cause to dismiss an employee at common law, the employer may still have to pay termination pay and severance pay (if applicable) under the ESA.

The same concept applies to Quebec. An employer can terminate an employee for a “serious reason” without paying reasonable notice for termination. However, even if the employer has a “serious reason” for terminating an employee, an employer will still be required to pay the minimum statutory notice of termination provided for in the Act, respecting labour standards, except if the termination is made for a “serious fault” (which is a higher standard than a “serious reason”).

“Without Cause Terminations” require employers to provide the employee with either advance notice of termination, or compensation in lieu of that notice. In determining what one’s notice entitlements are, there are three types of notice an employer will need to consider:

• statutory minimum termination notice;
• statutory minimum severance pay (in some provinces); and
• common law reasonable notice (or reasonable notice of termination in Quebec).

Alternatively, the parties may agree to a contract for a set period of notice, provided that period is not less than the statutory minimum requirements. However, employers cannot contract out of the statutory minimum requirements.

In Quebec, employers cannot contract out of the statutory minimum requirement or the reasonable notice of termination provided for in the Civil Code of Quebec. Moreover, an employer must have a good and sufficient cause of termination to terminate an employee with two or more years of continuous service, and may be exposed to complaints in the event of dismissal without just and sufficient cause.

Both unionised and non-unionised employees can potentially be entitled to the minimum statutory notice and severance pay. Common law reasonable notice (or reasonable notice of termination in Quebec) is potentially available to non-unionised employees, but not to unionised employees who have their employment governed by a collective agreement (unless the collective agreement provides otherwise).

Practically speaking, paying out the notice period is the more frequent choice as it is often awkward, inefficient, and undesirable to have an employee continue to work after receiving notice of termination. See details of payments in question 12.

The employer must take the following steps:

• review underlying documents (including organisational charts), decide what organisational change needs to be made and work out which positions are no longer needed, and plan the timing;
• adopt a decision on organisational change, including its effective date and which redundant positions are cancelled. The decision doesn’t have to be in writing or state reasons for the redundancy. However, both are highly recommended and a market standard, as this serves as evidence;
• if there are unions, consult the unions in advance (see question 4), and if a union representative is supposed to be made redundant, obtain the union’s consent in advance (see question 11);
• execute dismissal either by a termination agreement (recommended) or a termination notice with the redundant employees. In case of termination notice, the redundancy must (based on the decision) take effect on or before the notice period expired, not after; and
• implement the organisational change (including updating organisational charts).

Organisational changes may also be governed by collective agreements, in which case additional rules may apply (this applies to all the questions below).

Yes, where there is a “collective redundancy”, which in Canada is referred to as a “mass termination” or “collective dismissal”, this process differs. Each jurisdiction has different rules that trigger mass termination obligations when a certain number of employees are dismissed, at a certain location or within a certain geographical scope, within a specified period.

Unlike individual termination notice periods, mass termination notice periods are not dependent upon the employee's length of service.

In Ontario, the ESA states that mass terminations are triggered where 50 or more terminations at an establishment occur within a four-week timeframe. The length of notice then required depends on how many employees are affected:

• 50 to 199 = at least eight weeks;
• 200 to 499 = at least 12 weeks; and
• 500 or more = at least 16 weeks.

Formal written notice must first be given to the Director of Employment Standards (the Director) with advance notice of the mass termination in writing. The notice approved by the Director must then be posted in a conspicuous place in the employer’s workplace on the first day of the notice period.

In Quebec, the concept remains similar. A “collective dismissal” occurs when not fewer than 10 employees of the same establishment are terminated (or temporarily laid off for six months or more) in the course of two consecutive months. The length of notice then required depends on how many employees are affected:

• 10 to 99 = at least eight weeks.
• 100 to 299 = at least 12 weeks.
• 300 or more = at least 16 weeks.

For a collective dismissal, additional provisions and rules also apply, including giving notice to the Minister of Labour, etc. In all cases, an employer should always select the employees to be terminated in the context of a collective dismissal based on objective (and not subjective) criteria. Indeed, an employee with more than two years of continuous service could file a complaint for dismissal without good and sufficient cause if the decision to terminate was based on subjective criteria (and, therefore, argue that the “layoff” was a way for the employer to terminate the employment of said employee for subjective reasons).

Yes, Czech law provides a special procedure for “collective dismissal” in all three cases of organisational changes (see question 1).

The threshold is:

• ten employees if the employer has 20 to 100 employees;
• 10% of employees if the employer has 101 to 300 employees; and
• 30 employees if the employer has more than 300 employees.

The respective number of employees must be dismissed due to redundancy within a period of 30 days. If at least five employees are dismissed within 30 days by termination notice due to redundancy, then employees dismissed in the same period by termination agreement are included in these thresholds.

In addition to the process above, collective dismissal must be:

• consulted with unions 30 days in advance, or notified to each affected employee if there are no active unions at the employer; and
• notified to the local Labour Office: (i) in advance, including information on commencement of the consultation process with unions; and (ii) on its result once it’s completed, in the form of a written report that must be delivered in copy to unions, which then have the right to comment on it – employment relationships can terminate only after the lapse of 30 days following this.

There is no legislated requirement for consultation with unions or employee representatives at any stage of the redundancy process. However, a collective agreement may contain specific provisions regarding such a consultation.

Yes, the employer must consult any termination notice in advance. Agreement doesn’t have to be reached (with the exception of employees with enhanced protection; see question 11). In practice, the consultation is more of an announcement.

In case of collective dismissal, consultation must take place, and the employer must try to reach an agreement and inform the Labour Office of the result.

This does not apply because there is no requirement for consultation with unions or employee representatives at any stage of the redundancy process, unless required by the collective agreement.

The decision is made by an employer following an employer’s right of management. The employer must, however, be capable of justifying the rationale behind the permanent layoff, and the objective reasons why some specific employees are being terminated and not others. If the employer is unable to do so, the termination could be reversed by courts or adjudicators.

It is the employer’s right to make an organisational change and its factual validity cannot be challenged. However, the individual dismissals may be challenged by employees. If successful (ie, the employer doesn’t prove redundancy), the restructure in the individual case may be prevented.

In the case of collective dismissals, it may be delayed by the unions prolonging the consultation. However, even then the unions and the Labour Office can’t prevent the dismissal, and the only way to prevent individual dismissal is a successful individual challenge by the dismissed employee.

If the unions believe that the collective agreement was violated by the redundancy or in the process of its implementation, they may dispute this violation. The dispute may be resolved by a mediator or escalated to an arbitrator. However, this doesn’t prevent the employer from executing the dismissals or restructure (only if violation is later found, it may have certain implications based on the individual collective agreement and nature of its violation).

See question 5.

In case of individual dismissal, the consultation process is, rather, a notification (with the exception of employees with enhanced protection; see question 11) including:

• the identity of the employee;
• termination grounds (redundancy); and
• basic details of the redundancy (why and when).

It should take place prior to the dismissal (no specific deadline is given).

In case of collective dismissal, the consultation process includes:

• measures preventing or limiting the collective dismissal;
• mitigation measures (eg, employing the redundant employee at other workplaces of the employer);
• reasons;
• number and professions of redundant employees;
• number and professions of all the employees;
• the period during which the collective dismissal takes place;
• selection method of redundant employees; and
• severance pay and other rights of the redundant employees.

The consultation process must take place no later than 30 days prior to the collective dismissal. The local Labour Office must be notified as well (see question 3).

The administrative fine for violation of the consultation process with unions is up to 200,000 koruna. Employees who suffer damage as a result may claim compensation.

While no consultation is required, the employer’s economic business rationale still needs to be clarified and stated as the basis for the decision. Such terminations will be justified as long as there is a reasonable economic or business rationale behind the decision to terminate the employee or employees (for example, abolishing a position or reorganisation). A union can challenge the economic business rationale by filing a grievance, whereas an employee can file a complaint or start a claim for wrongful dismissal.

In doing so, the employee would be taking the position that the economic reason offered is merely a disguised way of dismissing certain employees. The burden of proof to justify the circumstances that led to the decision lies with the employer.

Yes, an economic business rationale should be the reason for organisational change, and therefore the redundancy, and as such should be part of the consultation.

No. The decision to proceed with termination is made following an employer’s right of management, and employees do not have a right to be involved with that decision-making process. However, a collective bargaining agreement could contain language limiting the right of an employer to lay off employees (for example, limiting the period when employees can be laid off). Unionised employees also normally retain recall rights when being laid off, in contrast to non-unionised employees.

A collective bargaining agreement could also state that an employer has the burden to demonstrate the grounds justifying a dismissal. Therefore, in a unionised context, just because an employer alleges that terminations are due to a layoff, this may not constitute a valid dismissal under the collective bargaining agreement.

In case of collective dismissals, if there are no unions or employee representatives, the employer must inform and directly consult the affected employees to the same extent.

In case of individual dismissal, it is not a requirement, nor best practice, and highly depends on the strategy in the individual case.

The decision to terminate an employee in the context of a work shortage or economic reasons should be made following an unbiased analysis and the application of objective criteria to all employees. Examples of criteria that can be used to justify a termination for economic reasons include the length of continuous service, preserving seniority, salary (i.e., terminating an employee to save money), and objective performance evaluation. The objective is to select and apply objective criteria to all employees impacted for the decision to terminate an employee to be objectively justified.

In Quebec, as in question 3, an employer who does not use objective criteria to select employees to be terminated could be open to complaints of dismissal made without just and sufficient cause from employees with more than two years of continuous service.

The only rule is that the employee’s position or work must be genuinely redundant (see question 1). If more than one employee fulfils this condition, it is up to the employer which employee to select. However, this choice must not indicate that there are in fact different motives for the redundancy of the selected employee (eg, disputes with the employer, unsatisfactory performance, or gender or other discriminatory motives).

No. All categories of employees may be impacted, including those on sick leave, or maternity or parental leave. See question 11 for special considerations.

Yes, a termination notice due to redundancy is not allowed during the period for which an employee is:

• declared temporarily medically unfit for work or in institutional treatment (unless the employee has intentionally caused this unfitness, or it is a direct consequence of the employee’s alcohol intoxication or substance abuse);
• deployed in military exercises or military service;
• on long-term full leave to act in public office;
• pregnant, or on maternity leave, paternity leave, or parental leave;
• declared temporarily unfit for night work if they perform night work; or
• on leave caring for a child under 10 years of age, treating a child under 10 years of age or other natural persons, or providing long-term care, all as specified in the Czech Sickness Insurance Act.

An employer may terminate any employee, in accordance with its management rights. However, for certain categories of employees (on sick leave or maternity or parental leave, for example), the employer must be able to explain the specific reason for terminating these employees. The decision to terminate them cannot be related to them being on sick leave, parental leave or maternity leave, or any other type of job-protected leave, as that would be discriminatory. Rather, the decision must be made for business reasons. If the evidence suggests employees on statutorily protected leave have been targeted, the employer will be exposed to a variety of additional liabilities under human rights codes or applicable labour laws.

Yes, members of a trade union body during their term of office and for a period of one year after the end of their term of office. The employer must have prior consent of the unions for termination of their employment relationship by a notice. Consent is deemed to be given if the unions don’t respond within 15 days. Consent is valid for two months. Termination notice without such consent is invalid unless the court decides in the validity case that the employer could not have been justifiably required to keep the employee.

A statutory termination notice is a statutory minimum period of notice that must be given, which varies from jurisdiction to jurisdiction, according to the length of employment. This cannot be conditional upon the employee signing a release.

Statutory Severance Pay is also a minimum standard in Ontario and the federal jurisdiction, which may require that longer-serving employees receive additional statutory severance pay, on top of a statutory termination notice, in recognition of the employee’s contribution to the business. This too cannot be conditional upon the employee signing a release.

Common law reasonable notice is generally a much longer period than the minimum standard termination notice period, and can be up to 24 months, and in extenuating circumstances even more than 24 months. Unless the employment contract enforceably limits the notice period to the applicable statutory minimum, or to another amount that is greater than the statutory minimum but lesser than the common law period, the employer must provide compensation for the common law notice period.

Quebec is not a common law jurisdiction, but a non-unionised employee dismissed without a valid reason is still entitled to a minimum statutory notice of termination (under the Act respecting labour standards), which is determined based on the length of continuous service, as well as a reasonable notice of termination as set out in the Civil Code of Quebec. Moreover, the duration of the reasonable notice of termination is subjective and varies depending on an employee’s age, salary, position and seniority. It can be up to 24 months. Other circumstances (for example, the context of the hire) could have an impact on the duration of the reasonable notice of termination.

Finally, following the Supreme Court decision Isidore Garon ltée v Tremblay; Fillion et Frères (1976) Inc v. Syndicat national des employés de garage du Québec Inc, unionised Quebec employees are not entitled to a “reasonable notice of termination” under the Civil Code of Quebec if the applicable collective bargaining agreement does not incorporate language to that effect.

Following this landmark decision, it was determined that the concept of “reasonable notice of termination” as provided for in the Civil code of Quebec is incompatible with the collective labour relations scheme. In other words, if the collective bargaining agreement does not include language regarding the payment of reasonable notice in terminations, terminated employees are only entitled to the minimum statutory notice provided for in the Act respecting labour standards, and not to the more generous reasonable notice of termination of the Civil code of Quebec (regardless of age, salary, length of service or position).

A redundant employee is entitled to a statutory severance payment, regardless of whether the employment termination is made by notice or agreement and if the redundancy is explicitly stated as the reason for the termination.

The severance payment is due on the next scheduled pay date following the termination of employment. A later due date can be agreed.

In Ontario, statutory notice or pay in lieu of notice is set out in section 57 of the ESA, which provides that the minimum statutory notice period that an employee is entitled to receive is between one and eight weeks, depending on the length of time the employee was employed by the employer. The employer must also continue to make the relevant benefit plan contributions that it would have been required to make during that notice period.

Statutory severance is set out in sections 63-66 of the ESA, which provides that an employee is entitled to severance when they have been employed continuously for five years or more and:

• the severance occurred because of a permanent discontinuance of all or part of the employer’s business and the employee is one of 50 or more employees who have their employment relationship ended within six months as a result; or
• the employer has a payroll of $2.5 million or more.

Severance pay is then calculated by multiplying the employee’s regular wages for a regular work week by the sum of:

1. the number of years of employment; and
2. the number of months of employment not included in clause a) that the employee has completed, divided by 12.

An employee’s severance pay entitlement should not exceed 26 weeks’ wages.

Common law entitlements are assessed individually where the employment contract does not limit them in an enforceable manner. In determining “reasonable notice” under the common law, there is no clear calculation, and this is often expressed as a reasonable range of time based on the specific facts of the given employee. For example, the courts will consider factors such as:

• length of service;
• the age of employee;
• the character of the position, including the degree of responsibility and the employee’s level of training and education; and
• the availability of similar employment, considering the experience, training and qualifications of the employee.

According to case law, the maximum notice an employee could receive (including statutory notice and treasonable notice) is generally considered to be 24 months of global compensation, unless there are extenuating circumstances. It is rare that anything more than 24 months is ordered by the courts.

Further, during the common law notice period, employees have a duty to mitigate. This is the rule that individuals who are terminated must make reasonable efforts to look for alternative employment during their notice period. This is based on the idea that the employer should not be responsible for losses the former employee could have reasonably avoided. As such, the employee has a duty to take reasonable steps to reduce their losses during the notice period, by trying to secure and accept a new, comparable role. Once new employment is secured, any income earned during the notice period reduces the amounts owed to them accordingly.

In Quebec:

In accordance with the Act Respecting Labour Standards, an employer must give written notice to an employee before terminating the employee's contract of employment or laying the employee off for six months or more.

This notice shall be:

• one week if the employee has less than one year of uninterrupted service (but more than three months);
• two weeks if the employee has between one and five years of uninterrupted service;
• four weeks if the employee has between five and 10 years of uninterrupted service; and
• Eight weeks if the employee has 10 or more years of uninterrupted service;

In addition, the reasonable notice of termination is based on the Civil Code of Quebec and assessed individually (an employment agreement cannot limit the right of an employee to receive such a reasonable notice of termination).

In determining the duration of a “reasonable notice of termination” in Quebec, the same concept as “common law entitlement” detailed above applies.

The severance payment amount differs based on the length of the employment as follows:

• one gross average monthly salary of the employee if the employment lasted less than one year;
• two gross average monthly salaries of the employee if the employment lasted at least one year but less than two years; and
• three gross average monthly salaries of the employee if the employment lasted at least two years.

If the working hours account applies (specific working hours distribution scheme under the Czech Labour Code) the statutory severance is the relevant amount above plus three gross average monthly salaries of the employee.

The severance payment may also be higher if stated so by:

• agreement between the parties;
• the employer’s internal regulations; or
• a collective bargaining agreement.

A gross average monthly salary of the employee must be calculated for each employee separately using the specific rules of the Labour Code.

In certain circumstances, employers must notify the government before making mass terminations (i.e., collective redundancies), but not individual terminations.

In Ontario, formal written notice must first be given to the Director of Employment Standards (the Director) with advance notice of the mass termination in writing. The notice approved by the Director must then be posted in a conspicuous place in the employer’s workplace on the first day of the notice period. This notification should be done in the form approved by the Director of Employment Standards and addressed to the Director and delivered to the Employment Practices Branch of the Ministry of Labour.

The length of notice then required depends on how many employees are affected:

• 50 to 199 = at least eight weeks;
• 200 to 499 = at least 12 weeks; and
• 500 or more = at least 16 weeks.

The requirement to notify the Director about redundancies does not apply where the number of employees being terminated is not more than 10% of the employees who have been employed for at least three months; and the terminations are not caused by the permanent discontinuation of part of the employer's business.[1]

In Quebec, employers similarly only need to inform local, regional or national government or regulators when proceeding with a permanent layoff of more than 10 employees in two consecutive months. However, in the case of a collective dismissal (when more than 10 employees of the same establishment are terminated or temporarily laid off for six months or more in two consecutive months), a notice must be sent to the Ministry of Labour before the terminations take place. The exact content of this notice is provided for in the applicable regulation.

This notification must be done:

• eight weeks in advance (when 10 to 100 employees are affected);
• 12 weeks in advance (when 100 to less than 300 employees are affected);
• 16 weeks in advance (when 300 employees or more are affected).

An employer must also post the notice in a conspicuous and readily accessible place in the establishment concerned. Moreover, in the context of a collective dismissal, the Commission des normes, de l'équité, de la santé et de la sécurité au travail (CNESST) or the union (if any) must be informed.

Not in cases of individual dismissals.

In cases of collective dismissals, the employer must notify the relevant branch of the Labour Office:

• of the intention to carry out collective dismissal;
• that the consultation process has been initiated with the unions or the employees; and
• of the specific aspects of the collective dismissal, to the same extent as the unions (see question 6).

Following the consultation, the employer must deliver a written report to the Labour Office stating:

• that the employer has decided on collective redundancies;
• the outcome of the consultation process;
• the number and occupational composition of all employees; and
• the number and occupational composition of the employees to be made redundant.

A copy of the report must be delivered to the unions, which then have the right to comment on it.

There is no obligation on employers to consider alternatives, including suitable alternative employment, but where the employees are unionised, their collective agreement could provide otherwise.

No, generally there is no such obligation. If the conditions for dismissal due to redundancy are met, the employer is not obliged to offer the employee an alternative solution.

However, in some specific individual cases, the courts have concluded that if the employer still needs the work on part-time basis, the employer should first offer the employee this part-time job.

There is no requirement for employers to notify the government and regulators after making redundancies. However, “Records of Employment” (ROEs) need to be submitted by the employer to Service Canada after an employee is terminated. A ROE provides information on employment history. It is the single most important document used by employees to apply for employment insurance benefits. Also, under the Employment Insurance Regulations (SOR /96-332), an employer must provide a ROE to an employee within five days of an interruption of earnings.

There are no specific notification obligations after making the redundancies. Only general notification obligations, which are the same for all employment terminations, apply.

These general notifications must be made within eight days, using the relevant forms, to: (i) the employee’s health insurance company; and (ii) the District Social Security Administration (including the pension insurance record sheet).

If wage deductions were made to satisfy the employee’s debt to a third party, the employer must notify the relevant court (or tax authority case of tax debt), including an account of the deductions.

In Ontario, yes.

At the Ontario Ministry of Labour or when bringing a civil action in court, non-unionised employees have two years from the date of their termination to file a complaint to the Ontario Ministry of Labour; or start a legal proceeding in court for wrongful dismissal. They cannot do both.

At the Ontario Human Rights Tribunal, non-unionised employees may also file a complaint to the Ontario Human Rights Tribunal if they believe their termination had something to do with one of the prohibited grounds of discrimination within one year of the last incident of discrimination.

Keep in mind there is a difference between unjust versus wrongful dismissal. Unjust dismissal is only available to federally regulated employees (i.e., federal workers) while wrongful dismissal is a common law remedy for non-unionised workers. Non-union federal workers in non-management positions who believe they have been unjustly dismissed have the right to bring an “unjust dismissal” complaint under the Canada Labour Code. For unionised employees, similar concepts apply, but a grievance would be filed by the union, and an arbitrator would decide the dispute.

In Quebec, non-unionised employees can file complaints with the CNESST based on section 124 of the Act respecting labour standards, alleging a termination made without good and sufficient cause (if they have more than two years of continuous service), or other complaints depending on the circumstances (prohibited practices, discrimination, etc). In that situation, it is the employer’s burden to justify the economic reasons for termination. A complaint before the CNESST would be heard before an administrative judge at the Administrative Labour Tribunal and, if successful, an employee could obtain various damages. They could even be reinstated in his or her employment, with full retroactive pay between the initial termination date and the date of the decision rendered by the tribunal.

To have these complaints dismissed, an employer must, therefore, be able to demonstrate that its decision to dismiss certain employees was based on objective and not subjective criteria (e.g., seniority or salary)

For unionised employees, similar concepts apply, but a grievance would be filed by the union, and an arbitrator would be mandated to hear the file. The remedies before an arbitrator would be similar to those that can be awarded by an administrative judge. Alternatively, employees could always file a civil claim in front of a civil court to obtain payment of reasonable notice for termination. In that case, a tribunal would hear the claim, would only have the power to award damages, and would not be able to reinstate the employee.

An employee may challenge the validity of a dismissal for redundancy if they consider that the statutory conditions were not met. First, the employee who wishes to remain employed must inform the employer without undue delay after the termination notice that they insist on continuing their employment. Second, the employee must file a lawsuit at the district court of the employer’s seat (residence or registered address). The lawsuit must be made within two months from the date on which the employment should have ended. After the two months, the right to file the lawsuit expires.

If the dismissal for redundancy is found invalid, the employee who wishes to remain employed remains to be employed at the original position under the original conditions and is entitled to a full compensation of salary for the whole time from the invalid termination until work is assigned again, or until the employment is validly terminated (ie, including the time of the court proceedings). The court may reduce the amount of such compensation if, for example, the employee has found another job in the interim, or could have found one.

There’s no statutory authorisation for unions to raise any claims at the court on behalf of employees except for insolvency proceedings (see question 21). However, only attorneys at law can represent employees fully and without limits in any proceedings. Another natural person can be granted a power of attorney in a specific case (not repeatedly). Theoretically, this could be a member or employee of the unions, but this is not a market standard.

Yes. When proceeding with termination due to restructuring or a shortage of work, it is common to provide an employee with a termination letter and a release to execute. However, a release can only be used where the amounts offered exceed statutory minimum requirements. For clarity, the provision of statutory minimums cannot be conditional upon an employee executing a release.

Yes, it is very common and highly recommended to terminate the employment by mutual agreement when making employees redundant. The termination agreement does not have to state any reasons for termination. However, should the reason be redundancy of the employee, the employee is entitled to statutory severance payment regardless. To motivate the employees to conclude the termination agreement, it is a market standard to offer a higher severance package than the statutory severance payment.

An individual termination because of a workplace restructuring can be done quickly, as long as the employer can objectively justify the reasons behind the termination of employment. Once the decision is made, we usually allow employees five to seven days to review the termination documents and return an executed copy. However, if negotiations ensue or a demand letter is received, then this may require several weeks or months to resolve.

A mass termination normally takes longer, because of the specific delays regarding the communication of a notice to the Minister of Labour. This can take approximately eight to 16 weeks.

Individual redundancies generally take around two to three months. The organisational change must be prepared, and the termination agreement negotiated or the termination notice given. In case of the notice, the statutory notice period is two months. There’s no statutory notice period requirement in case of agreement, therefore it can be faster. It can also take longer (eg, more complicated cases, restructuring, C-level or other higher managers).

For collective redundancies, the process takes several months (at least three) due to higher demands on preparation, more complicated structuring, the consultation process, and the notification obligation to the Labour Office.

There are no limitations on operating a business following a redundancy. However, unionised employers may be entitled to a right of recall under their collective agreements, which may have rules about who gets priority for re-hire with the employer.

Mass termination cannot be used to avoid the application of the law. It is thus recommended, but not required, that employers wait a certain period after the termination of employment before re-hiring new employees. This is to avoid unjust termination complaints. However, in some circumstances, employers can justify the re-hiring of employees soon after, based on the contextual nuances of their business needs, where applicable.

If, despite following the collective dismissal procedure, an employer delays the decision to proceed with the collective dismissal beyond the last day of the collective dismissal procedure, the whole process must be restarted from the beginning (including, namely, sending a notice to the minister), provided that 10 employees are maintained in position.

The statutory law does not expressly prohibit certain conduct. However, a redundancy means that the employee’s work is no longer needed and therefore any hiring (internal or external) for the same (or largely the same) position should be avoided (or at least thoroughly considered), especially for the two-month period during which the employee can challenge the validity of the dismissal.

In the common law jurisdictions of Canada, including Ontario, this depends on the transaction.

For example, in a sale of shares, the employer does not change and the purchaser effectively steps into the shoes of the vendor. Here, employees are often notified this will occur, but are not consulted in that they do not have input about whether it occurs. In short, the purchaser inherits all employment-related liabilities of the vendor, including all collective bargaining (union) obligations, so no direct consultation with the employees is necessary. That said, best practice would always recommend communication be readily and openly shared with employees so they understand the sale is occurring and what that means for them.

In a sale of assets, employees do need to be directly consulted as they will either be offered new employment or terminated. This is because the purchaser has two options:

• it can offer employment to the vendor’s employees, which the employees then need to review and consider; or
• it may decide not to offer employment to all or some of the vendor’s employees, bringing in terminations.

In circumstances where the purchaser does not offer employment to the vendor’s employees, such employees will either be terminated by an operation of law on closing or will remain employees of the vendor if the vendor continues to operate as a going concern. Either way, the employees need to be consulted to understand what will happen to them, what (if anything) is being offered, and, if necessary, which entity is paying out their termination entitlements.

In unionised settings, if all or part of a business or undertaking is sold, leased, transferred, or merged with another business or undertaking, the purchaser becomes the successor and is thus bound by any collective bargaining agreements applicable to the business. This means all obligations and proceedings continue as if the successor were party to the collective agreement.

In Quebec, consent of an employee in the context of a transaction is not necessary.

Under the Civil Code, a contract of employment is not terminated by the alienation of an enterprise or any change, of its legal structure by way of amalgamation or otherwise. The employment agreement is binding on the successor employer. The concept of “alienation” means any form of transfer of ownership of the business resulting from an agreement between the former and the new employer (i.e., sale, exchange, donation or inheritance of the business, whether on a personal or universal basis). The same applies to collective bargaining agreements, which automatically transfer to the new employer.

The Act respecting labour standards, from which it is not possible to derogate, also states that the alienation or concession of the whole or a part of an undertaking does not invalidate any civil claim arising from the application of the act (or its regulation), which is not paid at the time of such alienation or concession. The former employer and the new employer are bound in respect of that claim. Also, the alienation or concession in whole or in part of the undertaking, or the modification of its juridical structure, namely by amalgamation, division, or otherwise, does not affect the continuity of the application of labour standards.

The term “restructuring” in Czech law means one of the ways of resolving a company’s bankruptcy in insolvency proceedings. During this process, organisational changes including redundancies may occur. This kind of restructuring does not require unions’ consent; however, consultation may be required. Further, unions may represent the employees in insolvency proceedings.

In Czech law, “restructuring” within the meaning of a business transaction or corporate transformation or changes (i.e. not a type of insolvency proceeding) can also lead to transfer of rights and obligations from the employment relationship to another employer (transfer of undertakings), ie, the employee and their employment will be transferred to a new employer as a result of such transaction. In this case, the employer must inform the unions or other representatives (and if there are none, then the individual employees) and consult at least 30 days in advance:

• the effective date of the transfer;
• reasons for the transfer;
• legal, economic, and social consequences of the transfer for the employees; and
• measures to be taken in relation to the employees.

In case of cross-border mergers or spin-offs, the employer also must: (i) inform the employees or unions of their right to get acquainted with the written merger or spin-off project and give written comments on it; and (ii) generally reach agreement with unions regarding the extent and manner of the right of influence of the employees of the successor corporation (for example, in certain cases by electing a certain number of members of supervisory board in a joint stock company) if the seat of the newly formed entity is supposed to be in the Czechia. Further corporate obligations depend on the form of such restructuring.

However, the described labour law obligations don’t apply in the case of mere ownership change of the employer’s company where this has no direct legal implications for the employees (ie, it isn’t a transfer of undertaking or a termination reason).

Employees cannot take action to prevent such a proposal going ahead, but may nonetheless start a claim in civil court, file complaints, or file grievances if they feel they were improperly treated. See question 17.

In general, employees have limited ability to influence the process of business transactions. The consultation process (see question 21) doesn’t have to result in an agreement with or of the unions. The administrative fine for violation of the consultation process is up to 200,000 Czech Koruna. If there are no unions and the employer breaches its information obligation towards the individual employees (see question 21), the law provides no administrative penalty. In each case, the employee could claim compensation for damage if any damage occurred.

Throughout the common law provinces of Canada, the individual rights of employees in the context of a transfer are regulated through provincial employment and labour legislation. Also, non-unionised employees may claim certain rights in the event of a transfer based on the common law.

Generally speaking, where employees are terminated as the result of the transfer of a business, their principal statutory protections are that they become entitled to notice, termination pay in lieu, and severance pay. While not a statutory protection, non-unionised employees may seek greater entitlements to notice or notice pay under the common law if the same was not validly restricted by an employment agreement, and unionised employees may have greater rights under the collective agreement. Finally, where employees of the transferor are hired by the transferee, then the law may also state there is continuity in employment and that seniority to calculate various entitlements is unaffected by the transfer.

In Quebec, the same principles apply (see question 21). As employees are automatically transferred by operation of law (as provided both in the Civil Code of Quebec and the Act respecting labour standards), if they are terminated by the successor employer, employees are entitled to statutory notice of termination and reasonable notice of termination. The successor employer still must justify the decision to terminate an employee, as the employee keeps their legal protections against termination even following a transaction.

If the statutory conditions for transfer are met, the transfer occurs automatically, ie, neither the original employer, the new employer, the employees, nor the unions can avoid the transfer. An employee may prevent their own transfer only by serving termination notice to the employer before the transfer’s effective date, in which case the employment terminates on the day immediately preceding the transfer’s effective date at the latest. If the employer didn’t inform employee at least 30 days in advance (see question 21), the employee may serve their termination notice within two months after the transfer’s effective date – in which case, only a 15-day notice period applies.

Individual rights and obligations are transferred in full to the new employer. The rights and obligations under the original employer’s collective agreement are also transferred to the new employer, but only for the duration of the collective agreement, and for no longer than to the end of the following calendar year.

Transfer itself is not a statutory reason for terminating the employment. However, a restructuring (organisation change) leading to redundancy may happen before, during, or following the transfer. In such a case, the employee has the same rights as in the case of other redundancies.

If the employee terminates the employment by a notice or by an agreement within two months of the effective date of the transfer, they may raise a claim at court that the reason for termination was a substantial deterioration in working conditions caused by the transfer. If the court confirms it, the employee will be entitled to statutory severance (see question 13).

See question 21.

Since the transfer of rights and obligations under employment law occurs automatically, it is generally sufficient to follow the legally prescribed procedure for a given business transfer. In addition, it is necessary to comply with the information and consultation obligation (see question 21). Further, general reporting and notification obligations to the state authorities apply.

See questions 21 and 23.

The working conditions of the transferred employees cannot substantially worsen. If this were to happen and the employee gave termination notice within two months of the transfer, the employee could claim statutory severance (see question 23).

In addition, the employer must comply with the general principle of equal treatment and ensure equal treatment of both the original and new employees in terms of their working conditions, remuneration, and other benefits, training, and the possibility of promotion.

Yes, but only minor changes can be made or the employee could have a claim for constructive dismissal (in the situation where an employer substantially modifies the essential working conditions of an employee). A constructive dismissal entitles an employee to their termination rights, including notice pay. Where an employee alleges constructive dismissal, the employee has to refuse the change being made clearly and promptly. The employee then has the burden of proof to establish that the employer’s unilateral change resulted in a fundamental difference to the terms of their employment. This is not an easy burden to meet for many employees. In turn, the employer only has to show there is a genuine business need to make the change.

For this reason, unless the employment contract says otherwise, an employer cannot unilaterally change the employee's employment terms without providing the employee with fresh consideration. Fresh consideration refers to a benefit (like a signing bonus, increased compensation, etc) to bring in:

• significant changes;
• changes not agreed upon by the employee;
• changes made where the employer knew it would push the employee to quit;
• changes made where there were no valid business reasons for the change; and
• changes not explained to the employee.

As a result, only very minor reductions in hours or pay can be made without attracting too much liability. While not a steadfast rule, employers should be aware that constructive dismissal is most likely found when there has been a decrease in wages or hours by 10% or more.

If the hours, pay, or benefits are agreed in the employment or other contract, then no unilateral change can be made.

Working hours – either statutory weekly working hours apply (40 hours per week) or shorter working hours are agreed. In either case, the employer determines the distribution unilaterally (subject to complying with statutory rules and limits) unless agreed differently.

Salary – if it isn’t agreed in the employment or other contract, the employer unilaterally determines the salary by an internal regulation or by a salary statement.

Benefits – if they aren’t agreed in the employment or other contract, the employer unilaterally determines the benefits by an internal regulation or by a salary statement.

In Ontario, while possible to rely on a contractual provision to allow the employer to vary minor terms, employers should be cautious as such a provision is likely to be regarded as unenforceable by the courts. As such, even if the employment agreement does explicitly provide the employer with the power to make unilateral changes, courts may still find such a clause to be unenforceable, particularly if it is broad in scope. The more prudent course of action, when a term needs to be varied, would be to update the employment contract and provide fresh consideration.

In Quebec, providing that certain working conditions may vary within the employment relationship may limit the risk of a constructive dismissal claim being upheld. For example, if an employer plans to change the employee's place of work, a claim for constructive dismissal will be difficult to substantiate. However, depending on the nature of the changes, even the inclusion of such a clause or language may not prevent an employee from filing a claim for constructive dismissal. General language indicating that an employer can modify or change all working conditions would not protect an employer against a complaint.

As for employment terms and conditions in general, if these have been agreed in the employment or other contract, they can be changed only by agreement. Validity of express contractual provision to vary the conditions depends on its structure and which conditions it concerns, and therefore there’s no generally applicable answer to the question.

The Labour Code further allows, in certain cases, a change in type of work, workplace, or employer by a temporary transfer of an employee to a different work position, workplace, or employer. Generally, consent is required; however, in certain cases, the employer can (and in very specific cases, has to) make a temporary transfer unilaterally (for example, if the employee is medically unfit to perform the agreed type of work, or to avert imminent danger). The employer must adhere to strict statutory conditions.

Yes, an unwritten set of implied “terms by conduct” can impact the employment relationship, particularly around ambiguous terms or missing terms in the contract, and any such ambiguity will typically be construed in favour of employees. As with express terms, when the employer unilaterally changes one of these unwritten “terms by conduct” without giving sufficient notice of the change, then depending on the severity of the breach, the employee may be constructively dismissed.

Yes, the employee and the employer may agree on certain changes and variations implicitly. However, it is recommended to avoid such situations.

Yes, generally you need fresh consideration and employee consent to vary the terms of the agreement. However, if the employee still does not accept the unilateral change, the employee has the following options:

• the employee can consent to the changes explicitly or implicitly by continuing in the role, which means the employer simply moves forward;
• the employee can reject the changes by stating they are refusing the change and thus resigning to file a constructive dismissal claim; or
• the employee can reject the changes and continue in their current role, but then typically the employer will just move forward with termination if the changes were mandatory for the business.

If agreement is required to vary an employment term or condition, then the only option to vary it is an agreement.

See question 26.

If varied unilaterally in a case where agreement was required, the employee may challenge the variation (depending on the situation, by demanding the employer to: refrain from such conduct, restore the original terms, or compensate the employee for the damage caused by such conduct). Depending on the situation there could also be a risk of administrative penalties.

All Canadian employment discussions must consider the specific applicable jurisdiction at issue because Canada is unique in its legal landscape. Canada is a federal state, with governmental jurisdictions divided among the federal level of government, 10 provincial governments, and three territorial governments. In the vast majority of cases, a workplace will be governed by the provincial jurisdiction of the province in which it is located. In some cases, however, the workplace will be federally regulated and federal legislation will apply, for example with sectors like air transport, interprovincial pipelines or trucking, chartered banks, crown corporations, and rail and water transport. Further, all provinces and territories in Canada are common law jurisdictions except Quebec, which is a civil law jurisdiction. Courts in the common law jurisdictions thus apply a combination of statute and common law, whereas courts in Quebec apply the Civil Code of Quebec, as well as federal and provincial statutes. This Guide uses both Ontario and Quebec jurisdictions as primary examples.

The Czech parliament is currently debating several changes in the area of labour law. However, none of the currently debated changes should affect the answers above.