Lawyers say a $2.5 million class action lawsuit against an auto parts maker highlights the need for employers to alert the Ministry of Labour early when closing down a facility.
Nearly 100 auto parts workers are represented on the lawsuit, which was brought against their former employer, CTS of Canada Co., after it shut down its Mississauga plant in 2015.
The workers recently filed a summary judgment motion against CTS to have their day in court without having to go to trial.
The claim alleged the American car parts manufacturer failed to give them proper notice when it closed down the plant to sell the land and move its operations to Mexico and China.
At issue is whether CTS filed a Form 1 with the Ministry of Labour when the company gave its employees notice the plant would be closing.
Under the Employment Standards Act, employers who lay off more than 50 employees must submit the form to the ministry in order for their notice of mass termination to come into effect.
A copy of the form must also be posted in the workplace on the first day of the notice period in addition to providing employees with individual notice.
“Form 1, even though it’s a technical requirement, it’s part of a scheme that is supposed to apply when you have group notice under the act. It’s an important part of it because it gives the Ministry of Labour notice of what’s happening,” says Landon Young, the managing partner of Stringer LLP, who is not involved in the case.
In their claim, the workers alleged CTS did not file the form, rendering their severance letters null and void.
“What we’ve alleged and I think we’ve clearly proven here is they neglected to actually inform the Ministry of Labour that this plant was closing,” says the plaintiffs’ lawyer, Stephen Moreau, a partner with Cavalluzzo Shilton McIntyre Cornish LLP.
“When you close a plant, you’re supposed to tell the Ministry of Labour so that the labour ministry can get involved and help people reintegrate into the workforce.”
CTS announced the plant would close in Feb. 2014, which was more than a year before the intended closure date. In April of that year, the company gave individual severance letters to its employees, letting them know the plant would stop manufacturing by March 2015.
In their statement of defence, CTS said that the company discovered “its error” in not submitting a Form 1 initially and did so in May 2015, informing the ministry of their plans to close the plant in June.
CTS argued that the fact that the Form 1 was not submitted at the time the severance letters were issued did not void them, as they were only required to submit a Form 1 within four weeks of closure.
“CTS denies that any of the Plaintiffs were wrongfully dismissed,” said the company’s statement of defence.
“CTS states that all of the Plaintiffs received reasonable notice of the termination of their employment and many of them received far greater than reasonable notice of the termination of their employment due to the extended length of the working notice period provided.”
Moreau says the fact that CTS was nearly 13 months late in filing its Form 1 meant that the Ministry of Labour could not conduct the proper employment services for the employees.
“The notice is not a trifling matter,” he says.
Employment lawyers say this case highlights the importance of filing a Form 1 early in the process.
“That’s an essential first step. That’s the first thing we do is we get the client to fill out that form,” says Hendrik Nieuwland, a partner at Shields O’Donnell MacKillop LLP, who is not involved in the case.
Nieuwland says that if the claim is successful, giving workers one year of advanced working notice might have all been for nothing and that the employer might end up having to pay the former employees minimum notice amounts in addition to the year of work they completed.
Kristin Taylor, of Cassels Brock & Blackwell LLP, who has represented CTS in the class action proceedings, declined to comment, as the lawsuit, which was certified in January, is ongoing.
The plaintiffs expect their summary judgment motion will be heard in July 2017.