What Constitutes an Agreement to a Temporary Layoff?

Written on behalf of Peter McSherry
Welder working representing wrongful dismissal
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In the last few years, many employees across all job sectors have faced layoffs due to the economic consequences of the COVID-19 pandemic. Despite the pandemic largely impacting Canada in March 2020, Statistics Canada reported that by June 2020, 12.4% of Canadian workers had been laid off since the pandemic started.

When an employee is laid off, their employment is terminated due to no fault of their own, and the termination is often due to budget cuts or corporate restructuring. In the event of a temporary layoff, the company may stop paying the employee without being required to pay severance or provide notice. A recent decision from the Court of Appeal for Ontario shows that an employee’s refusal to agree to a temporary layoff is not necessarily akin to agreeing to the layoff.

Welder is laid off at the start of COVID-19 pandemic

In the case of Pham v. Qualified Metal Fabricators Ltd., the employee had worked as a welder for the employer since October 2000. At the time of the COVID-19 pandemic, the employee was 51 years old and had been working for the employer for almost 20 years. When the pandemic started, the employer lost a great deal of their business and laid off 31 of its 140 employees, including 11 of 18 welders, one of which was the employee.


The employee’s manager met with the employee on March 23, 2020, to inform the employee of the layoff. The employee was told that the layoff would be temporary and that he could expect to be recalled by June 19, 2020. The employee was also provided with a letter, which the Court referred to as “the Layoff Letter,” that outlined the details of the layoff.

The layoff period was extended several times

While the Layoff Letter stated that the layoff was in accordance with the employee’s work agreement, the employee said he was not given a copy of any agreement. The employee also indicated that he did not sign the letter. However, there was a signature beside his name.

The layoff was extended a number of times, eventually stretching until September 4, 2021, a full 18 months since the layoff was first advised of. Six months into the layoff period, the employer advised the employee that the layoff was subject to a regulation under the Employment Standards Act, which stated that employees subjected to temporary layoffs could be deemed instead to be on Infectious Disease Emergency Leave as opposed to termination.

Employee says he did not consent to layoff

In December 2020, the employee contacted a lawyer and advised the employer that he did not provide consent to the layoff, nor was he asked to provide such consent by the employer. The employer, in turn, pointed to the Layoff Letter from the meeting in March 2020 as evidence of his agreement to the layoff.

The employee filed a statement of claim stating the employer wrongfully dismissed him. The employer responded by seeking a summary dismissal of the action on the basis that the employee did agree to the layoff or in the alternative, had failed to mitigate his damages by not seeking alternative employment.

Motion judge grants request for summary dismissal

The motion judge granted the employer’s request for summary dismissal. However, the employee appealed the decision to the Court of Appeal for Ontario on three grounds, namely:

  1. The motion judge was under the mistaken understanding that both parties sought summary judgment and therefore failed to consider whether it was appropriate in the circumstances;
  2. The motion judge erred in finding there was an implied agreement to layoff because the employee was aware of many of his co-workers being laid off; and
  3. The motion judge erred in determining the employee condoned the layoffs by signing the letter and not protesting his layoff.

Court of Appeal assesses the grounds for appeal

The Court looked to the Rules of Civil Procedure, which outline when a summary judgment is appropriate. The rules state that a Court should grant a summary judgment when it is satisfied that there is no genuine issue requiring a trial of a claim or defence and also that the parties and Court agree that summary judgment is appropriate.

In this case, the employee originally agreed to a summary judgment. However, he later reversed that position. The employee claimed that they had not had the opportunity to cross-examine witnesses from the employer and that discovery had not yet taken place. The motion judge, who believed that the employee still agreed to summary judgment, did not stop to consider whether it was appropriate, leaving the Court of Appeal to find that summary judgment should not have been granted.

Was there implied consent to the layoffs?

The Court then turned to the issue of whether there was implied consent from the employee to the layoffs. Since the terms of employment did not expressly permit the employer to lay off the employee, the question before the motion judge had been whether there was implied consent.

The employer said that by September 2020, most of the welders it employed had been recalled and that the employee would have been “undoubtedly aware” that he would be recalled before long. However, this argument did not speak to the layoff occurring in the first place.

The Court found that the layoff of other workers did not constitute an implied term of the employee’s contract. The Court stated that “the fact that the respondent previously laid off some of the appellant’s co-workers does not justify the result the motion judge reached as it does not constitute an implied term in the appellant’s contract to lay him off.”

Court of Appeal sets aside summary judgment

The Court then turned to the final grounds of appeal to determine whether or not the employee had condoned the layoff. The Court found that the signature in the Layoff Letter did not constitute condonation and instead stated that the signature could be an acknowledgement of the receipt of the letter. Furthermore, in turning to the finding that the employee failed to reject the layoff, the Court determined that the motion judge failed to consider that the employee was entitled to a reasonable time period to assess the contractual changes of the layoff.

The Court noted that the motion judge should not have equated the employee’s silence with condonation. Instead, the motion judge should have looked for positive action from the employee to indicate condonation.

The Court ultimately decided that the employee was correct on all three grounds of appeal. The Court subsequently set aside the summary judgment as a trial for wrongful dismissal was suitable in the Superior Court.

Contact Peter A. McSherry in Guelph for Advice on Employment Terminations and Representation in Wrongful Dismissal Cases

Trusted employment lawyer Peter A. McSherry understands how a layoff or termination can detrimentally impact employees. In situations where an employee has been wrongfully dismissed or constructively dismissed from their job, our employment law team works diligently to protect the rights of employees. We also advocate for clients to help them recover fair compensation after an unlawful dismissal or severance process. Contact Peter A. McSherry, Employment Lawyer, by phone at 519-821-5465 or fill out our online form to arrange a confidential consultation.