Yesterday, the Premier of Ontario, Doug Ford, announced a shutdown of non-essential services amidst the Covid-19 crisis. With this announcement, we can expect a significant increase to the number employees laid-off.
Well-intentioned employers are laying off employees in an effort to preserve the long-term prospect of the job, while employees are scrambling, wondering what their entitlements are during these uncertain times.
It is crucial for both employees and employers to understand how to best navigate these unprecedented times in order to put themselves in the best position going forward
What is a Temporary Layoff and How Long Can it Last?
A temporary layoff occurs when the employer stops or reduces the employee’s hours for a specific period, without actually ending the employment permanently (which would be considered a termination of employment).
According to the Employment Standards Act, 2000 (“ESA”), a temporary lay-off cannot last more than 13-weeks in a 20-week consecutive period. To layoff an employee for a period longer than this would be considered a termination of his or her employment (unless any of the below exceptions apply) and the employee would therefore be entitled to termination pay and severance, if applicable.
However, under the ESA, there are some instances where the temporary layoff can last for a period longer than 13-weeks, up to as much as 35 weeks in a period of 52 consecutive weeks; this includes when:
- the employee continues to receive substantial payments from the employer; or
- the employee continues to receive their regular health benefits and pension benefits; or
- the employee receives employment insurance (“EI”) benefits; or
- the employee would be entitled to receive EI benefits but isn’t receiving them because they are employed elsewhere; or
- the employer recalls the employee to work within the time frame approved by the Ministry of Labour; and
- the employer and employee agree to a time-period less than 35 weeks.
Are Temporary Layoffs allowed?
An employer has no right to impose a temporary layoff either by statute or common law, unless that right is specifically agreed to in the employee’s contract (which is rarely the case). To do so, without a valid clause in the contract, would be considered constructive dismissal and would thus trigger termination pay and severance, if applicable. Other exceptions to when an employer can temporary layoff its employees include:
The employer or business is seasonal, as is often the case in the construction industry, where layoffs are anticipated; or
Where the employer has a well-known practice of layoffs and recall.
Therefore, a temporary layoff may trigger constructive dismissal, possibly entitling an employee to many months, or possibly over two years, of termination pay depending on the circumstances.
Employees ought to know that an employer does not automatically have the right to layoff its employees without triggering the obligation to provide them termination pay.
The employee must act within reasonable time to decide whether they want to accept or refuse the lay-off and claim constructive dismissal (assuming there isn’t a valid lay-off clause in the contract of employment – seldom will the clause exist). If offered the job back at a later period, the employee can always accept it but would be at least eligible to all of the pay-in-lieu under the ESA and any severance, if applicable.
Employers can mitigate their liability by working out an agreement with the employee. In these unprecedented times with the covid-19/coronavirus crisis, perhaps novel methods can be adopted which benefit all parties involved and mitigate cost and liability.
Employers can also mitigate the damages by potentially offering the job back once the uncertainty subsides and the employer is in a position to do so. This will presumably mitigate the damages that the employee can claim.
However, each situation is unique and navigating through this correctly will require careful consideration to the unique circumstances at hand; falling to do so can be costly.
Yusuf Buttar is an employment and human rights lawyer. He specialized and practices in this area exclusively.