Right or No Right of Lay-off?

Written on behalf of Peter McSherry
Man fixing tie after being given notice of layoff
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One would expect that the issue of temporary lay-off would be straightforward. After all, Ontario’s Employment Standards Act appears to allow the employer that very right. However, an  employer’s right to carry out a temporary lay-off is actually quite complicated.

The Legislation

The statute allows a temporary lay-off of not more than 13 weeks in any period of consecutive 20 weeks or more than 13 and up to 35 weeks in 52 consecutive weeks, provided that certain other terms are met in the latter instance.

The Judicial Interpretation

That being said, Ontario’s Court of Appeal[1] has decided otherwise, and concluded that barring an agreement with the employee, the employer has no right of temporary lay-off no matter the wording of the legislation. Should the employer attempt to do so unilaterally, the employee may consider this action to be a fundamental change of the unwritten terms of employment and assert that such action has terminated the employment relationship.

Duty to Mitigate

There remains, however, another issue to be added to the mix. An employee who has been terminated may be required to return to the very same company by an offer of re-employment[2], absent any conduct which shows a substantial change in the terms of employment, provided that the work is not demeaning, the personal relationships are not acrimonious, and that there is no atmosphere of hostility, embarrassment or humiliation.

Mitigation Applied to Lay-Off as Termination

This issue was considered in a recent Ontario decision where the court agreed that the employer had no right of lay-off and that its lay-off notice constituted termination of employment. That being said, the court went on to find that the employer’s offer of re-employment after 3 months lay-off was made in good faith. The employee ought to have returned to work and hence his claim was limited to the three month lay-off period.

This Court considered the same plea from the company in the decision of Chevalier v Active Tire. The plaintiff had been advised of his lay-off, only to be told a few days later that the company had mistakenly believed it had a legal right to carry out the lay-off, and then offered him his employment back on similar terms. This offer was declined and was fatal to the plaintiff’s case as the trial judge found this to be a failure to mitigate.

Missing Submissions

A further argument that could be advanced,  but has not been to date, is that the agreement by the employee to accept a recall request implicitly creates a visible past practice which can later be used against the employee to justify a subsequent lay-off. Even if the employee were to consider such a return to work, he should request an acknowledgement that he has not accepted the lay-off as a contractual term.[3]

Neither case considered this possible further argument, perhaps due to the payrolls of the company being less than $2.5 million.[4] Given the finding that the lay-off is a termination in law, then it must follow that the statutory severance pay of up to 26 weeks and notice of up to 8 weeks must be paid. The employee could surely insist on payment of these sums as a condition of a return to work and also insist that such a return to work is not an acceptance of the employer’s right of lay-off.

Who Would Expect Such Complications?

No one but an employment lawyer would expect such legal jumble in such an apparently straightforward issue. It must also be kept in mind that an employment agreement may change these terms, usually to the employer’s advantage.

Get Proper Advice Before You Act

If you are facing a temporary lay-off, either in compliance with the Employment Standards Act or otherwise, it is important to take legal advice as soon as possible in order to protect your rights. Obviously the law on this subject is complex and requires guidance from a knowledgeable employment lawyer.

If you are an employee seeking legal advice on temporary lay-off, termination, or any other matters related to your employment, contact the offices of Guelph employment lawyer Peter McSherry. We can guide you through the issues and defend your position. Contact us online or by phone at 519-821-5465 to schedule a consultation.




[1] Stolze v Addario

[2] Evans v Teamsters

[3] This seemed to be the implicit theory in the decision of Moore J. in Turner v Uniglobe in rejecting the employer’s submission to this argument of recall.

[4] A payroll over $2.5 million requires severance pay of one week per year to a cap of 26 weeks. The employee in this case had been employed for 19 years and given such a payroll, would have been entitled to a further 19 week sum.