The True Meaning of Layoffs
CN Rail has reportedly begun to recall some of the 450 workers who were laid off during the anti-pipeline protests and blockades that spanned across the country. With the stock market’s recent downturn due to apparent Covid-19 concerns affecting the global economy (not to mention new cases in Toronto and Ontario), there could be a perfect storm for a recession and a hit to the job market. In the 2008 recession, more than 400,000 jobs were lost or subject to layoffs. Should the economy be truly affected, here is what you should know about layoffs in Ontario.
Employees Can be Laid Off at Any Time
Even if the market is strong, like employment terminations, nothing stops an employer from laying off an employee for any reason or no reason at all.
Further, some employers will “permanently” lay an employee off. This is just a nicer way to call an employment termination. If there is no prospect of coming back, it’s a termination.
Even though an employer can layoff an employee, how an employee can respond to a layoff will depend.
Under the Common Law, Temporary Layoff = Employment Termination
Under the common law, most employers do not have the authority to subject an employee to a temporary layoff. The courts have considered a termporary layoff to be a repudiation, or rejection, of the employment relationship. Faced with a temporary layoff, an employee in these circumstances will be able to claim constructive dismissal and ask for their severance.
Even if an employee can claim constructive dismissal for being laid off, they may have an obligation to return to their job if they are called back to work.
An employer will have the authority to temporarily layoff an employee if the employment contract explicitly provides this authority. An employer will also have this authority if there is an established practice of layoffs.
Layoffs Under the ESA
If an employer has the authority to layoff an employee, the Ontario Employment Standards Act (ESA) provides the maximum amount of time that an employee can be laid off before it is considered a termination.
From section 56(2) of the ESA, a layoff will be considered temporary and not a termination if it is:
a lay-off of not more than 13 weeks in any period of 20 consecutive weeks;
a lay-off of more than 13 weeks in any period of 20 consecutive weeks, if the lay-off is less than 35 weeks in any period of 52 consecutive weeks and,
the employee continues to receive substantial payments from the employer,
the employer continues to make payments for the benefit of the employee under a legitimate retirement or pension plan or a legitimate group or employee insurance plan,
the employee receives supplementary unemployment benefits,
the employee is employed elsewhere during the lay-off and would be entitled to receive supplementary unemployment benefits if that were not so,
the employer recalls the employee within the time approved by the Director, or
in the case of an employee who is not represented by a trade union, the employer recalls the employee within the time set out in an agreement between the employer and the employee; or
in the case of an employee represented by a trade union, a lay-off longer than a lay-off described in clause (b) where the employer recalls the employee within the time set out in an agreement between the employer and the trade union.
Employee Education:
If your employment contract does not allow the employer to lay you off, or if there is no established practice of layoffs, you may be able to claim severance from a layoff.
Employer Education:
If your business is subject to factors out of your control, you should think about informing employees about the nature of the business and that they may be subject to temporary layoffs on occasion. To ensure a business can termporarily lay off employees, they should have a layoff provision in their employment contracts.
Jason Wong is a Toronto Employment Lawyer practicing exclusively employment, labour, and human rights law. If you are an employee or employer who has questions about layoffs, please contact Jason at jason@wongemploymentlaw.com or 647-242-5961.