Windsor-Essex employers know how quickly conditions can change. Shifts in the auto sector, cross-border trade and supply chains can force a business to reorganize with very little warning. When that means reducing staff, the decisions you make in the planning stage will largely decide whether the process is smooth or ends in a stack of wrongful dismissal claims. Here’s what employers should think about before announcing any changes.
Start with your contracts
Before you choose who’s affected, look at what your employment contracts actually say. Do they contain termination clauses that limit employees to the minimums under the Employment Standards Act (ESA)? Do they allow temporary layoffs? The answers can change your costs dramatically.
In August 2026, the Ontario Court of Appeal confirmed that termination clauses using words like “at any time” aren’t automatically invalid, which is good news for employers. But a clause that breaches the ESA in any respect can still fail, and when it does, employees may be entitled to common law reasonable notice. A legal review of your templates before a restructuring is money well spent.
Temporary layoff or permanent termination?
If the slowdown is likely to be short, a temporary layoff can preserve your workforce. But unless your contracts allow layoffs, or they’re an established practice in your workplace, an unpaid layoff can be treated as constructive dismissal. Layoffs also have strict time limits under the ESA. If you exceed them, the layoff becomes a termination. Since late 2025, longer layoffs are possible in some cases, but only with the employee’s written agreement and approval from the Director of Employment Standards.
Mass terminations have their own rules
If you’re ending the employment of 50 or more employees at one location within a four-week period, special ESA rules apply. You’ll need to give longer notice, at least eight, 12 or 16 weeks depending on the number of employees affected, and file the required notice with the Director of Employment Standards. Since late 2025, employees who receive notice in a mass termination may also take up to three days of unpaid job-seeking leave during the notice period.
A related rule applies to ESA severance pay. If 50 or more employees lose their jobs within six months because all or part of the business at a location permanently closes, employees with five or more years of service may be owed severance pay even if your payroll is below the usual $2.5 million threshold.
Choose fairly and document why
How you select employees matters. Decisions should be based on legitimate business criteria such as role, skills and operational needs, and you should be able to explain them. Selections that disproportionately affect employees on leave, older workers or those with disabilities can lead to human rights complaints. Keep a clear record of how decisions were made.
If your business operates through several related companies, be aware that courts may treat them as one “common employer.” Our article on the Boyce Estate common employer ruling explains why that matters.
Handle the exit well
A respectful process reduces claims. Deliver news in person where possible, provide ESA entitlements on time, and consider offering a package above the minimum in exchange for a signed release. Working notice can also reduce costs, as long as it’s genuine.
Plan with an employment lawyer
Our Windsor employment lawyers advise employers across Windsor-Essex on restructurings, layoffs and workforce reductions. Our article on how a labour and employment lawyer can protect your business explains how early planning pays off, and our wider employment law team can support larger projects.
