Written on behalf of Peter McSherry

To be laid-off from your employment means that your employer has approached you and, in accordance with the provisions of the Employment Standards Act and any employment contract, has instructed you not to return to work unless and until your services are again required. Lay-offs, on the other hand, may vary in length, so long as a lay-off is conducted within the confines of the law, it is acceptable for an employer to utilize a lay-off as a means of managing its resources.

Many employees have experienced being laid off from their employment only to be called back to work once the employer has resolved the issues that caused it to lay employees off in the first place. However, it is also possible that a person be laid-off from their employment and never be called back to work. In effect, then, such an employee has been constructively dismissed from their employment. In that case, such an employee would presumably be entitled to receive certain compensation, such as severance pay, that would be unavailable to a temporarily laid-off employee. This blog post will help clarify the circumstances in which a lay-off becomes a termination.

An Employee is Laid-Off Because of COVID-19

In the recent decision Chalmers v Airways Transit Service Ltd. And Badder Capital Group Ltd., the Ontario Superior Court of Justice heard the case of Michael Chalmers (“Michael”), who had been employed by Airways Transit Services Ltd. (“Airways”), which offers airport shuttle services. Michael was hired by Airways in 1992 as the Manager of Accounting, and in 2018 he was promoted to the position of Vice President of Airways. The parties did not sign an employment contract when the promotion was formalized.

At the outset of the COVID-19 pandemic, when global travel was severely restricted, Airways made the decision to discontinue its services given the sharp drop in flights and associated need for shuttle services. As such, in March of 2020, Airways laid off all of its employees, including Michael, and drastically cut its entire operation. By June 2020, Airways had recalled its entire management team with the exception of Michael. From June 2020 through to the end of December of 2020, Airways continued to call back non-management employees, including mechanics, drivers, and marketing personnel.

In July 2020, Michael contacted Airways to ask when they thought he might be called back to work but received no clear response. Despite repeated attempts to communicate with Airways throughout the ensuing months, Michael was never recalled to work, and by May 2021, he testified that “it had become clear to him that his layoff was not temporary” as the company had ceased responding to any of his attempts at communication. As such, Michael took the position that he had been terminated from his employment, and he brought a claim seeking damages for constructive dismissal.

Is the Lay-Off Excused Because it Happened During COVID-19?

Layoffs are usually governed by the Employment Standards Act, which dictates how long and in what circumstances an employee may be laid off, and by the terms contained in a written employment contract. However, at the outset of the COVID-19 pandemic, the Ontario government passed emergency legislation to govern how employers treated their employees during a time when few people were permitted to leave their homes, much less attend at their jobs. Airways argued that the regulation, the Employment Standards Amendment Act (Infectious Disease Emergencies), created a new category of leave known as Infectious Disease Emergency Leave (“IDEL”). In fact, this legislation did provide that any temporary layoffs occurring during the period of March 1, 2020 through July 30, 2022 were to be considered infectious disease emergency leaves and as such, were to be governed by the provisions of the IDEL instead of the Employment Standards Act. Importantly, the IDEL expressly dictates that any person laid off under the IDEL is not allowed to assert a claim for constructive dismissal, regardless of whether such a layoff resulted in temporary reduction of an employee’s hours or even eliminated their position altogether.

The Court rejected Airways’ position, noting that both the Employment Standards Act and the IDEL contemplated a temporary layoff from employment, which it defined as lasting from 13 to 35 weeks. Since Michael had been laid off for nearly three years at the time of trial, his layoff could certainly not be considered to be temporary. Moreover, all of the other employees of Airways had been recalled and had returned to the workplace, and only Michael remained laid off. Taken together, this led the Court to conclude that Michael’s layoff was neither temporary nor was it related to the COVID-19 pandemic. Finally, the Court noted that Michael had not filed a complaint under the Employment Standards Act, but rather had asserted his common law right to damages for constructive dismissal. Since he was not acting under the Employment Standards Act, his claim could not be thrown out as Airways suggested it should be.

Was The Employee Constructively Dismissed?

The Court reiterated that since Michael had been laid off for three years (in other words – not temporarily) and was the only employee of Airways who remained laid off while all other employees had long since been recalled, “his layoff was neither temporary nor for reasons related to the COVID-19 pandemic.” The evidence demonstrated that Airways simply believed that Michael earned too high a salary so they did not want him to return to the workplace. Instead, they had subdivided Michael’s job duties amongst three other employees who had been recalled, in an effort to thwart their legal obligations to Michael while relying on the pandemic as justification for their decision.

The Court also noted that non-union employees may only be laid off by an employer where there is a provision in the employment contract dictating the terms under which such a layoff may occur. Since Michael and Airways had never signed a formal written employment contract, Airways had not had the right to lay Michael off in the first place. Since Michael had neither resigned nor been formally terminated by Airways, the court was satisfied that he had, in fact, been constructively dismissed.

Contact Guelph Employment Lawyer Peter McSherry Today

If you have been laid off from your employment and have not been recalled, you may be wondering what your rights are. Guelph employment lawyer Peter A. McSherry has extensive experience handling layoff and constructive dismissal claims. Contact our office online or by telephone at 519-821-5465 to arrange a consultation. We will guide you through the unknowns during this challenging time and will ensure that your rights are protected every step of the way.