By: Greg A. Carr
One of the most common misunderstandings amongst employers and employees alike, involves an employer’s right to impose a temporary layoff on an employee. It is not uncommon for an employer to impose a temporary layoff, and for an employee to accept that temporary layoff, on the common misunderstanding that the employer had that right. In actuality, that employee may have been terminated and would be entitled to damages for wrongful dismissal.
Temporary layoffs are referenced in the Employment Standards Act, 2000 (the “ESA”), where it defines a temporary layoff in two ways:
a lay-off of not more than 13 weeks in any period of 20 consecutive weeks, or;
a lay-off of more than 13 weeks in a period of 20 weeks, if the lay-off is less than 35 weeks in any period of 52 weeks, where certain conditions are followed by the employer.
The ESA further provides that an employer will have terminated an employee if the employer has laid off the employee for a period longer than the period of a temporary layoff, as referenced above.
Importantly, the ESA does not provide an employer with the right to impose a temporary layoff on an employee.
In the 1997 Ontario Court of Appeal decision of Stolze v Ontario (Adjudicator appointed under the Employment Standards Act), the Court held that in the absence of evidence of a policy or practice within the employer company of temporarily laying off employees, the layoff of the plaintiff constituted termination of that employee, entitling them to damages for wrongful dismissal.
Since Stolze, Ontario courts have consistently held that the imposition of a layoff, where there is no express or implied term in the employment contract permitting such a layoff, repudiates a fundamental term of the employment contract. The effect is that on the day that the temporary layoff was imposed, that employee is deemed to have been terminated. An employer does not have the right to impose layoffs, absent a contractual term providing that right.
Employees who have been placed on a temporary layoff should consult the expertise of an employment lawyer to canvass their rights in the circumstances. While employers would be well-advised to include a clause in all standard employment agreements providing for the imposition of a temporary layoff, should the need ever arise.
If you require advice on an employment matter or any other legal issue, the experienced team of lawyers at Giffen LLP would be happy to meet with you to discuss your matter and determine how we can best assist you moving forward.