Justin W. Anisman is an Employment Lawyer and principal of Anisman Law. Justin advises both companies and individuals in all aspects of employment law including wrongful dismissal, human rights and discrimination.
Temporary Layoffs Are Not Allowed for Most EmployeesThe first and most important thing to understand about temporary layoffs is that in most situations they are not allowed. There is no implied right to layoff an employee. Even though the ESA provides guidelines concerning the maximum length of a temporary layoff, the Ontario Courts do not permit an employer to layoff, or suspend an employee, without pay, unless:
- It is one of the written terms in the employment contract; or
- The layoff or suspension was agreed to by both employee and employer—this agreement can take the form of a written contract, a well-communicated policy or indirectly through a widely known practice within your employer’s organisation or industry (i.e. seasonal workers, construction industry, etc…).
… the absence of evidence of a policy or practice within the employer company of laying off “key” employees, constitutes the lay-off a repudiation of a fundamental term of this employee’s contract. He was, therefore, constructively dismissed.
What is a Temporary Layoff?A temporary layoff is when a employee’s hours are reduced or eliminated on a short term basis with the intention that they will shortly be recalled. At the time an employee is laid off, an employer is not required to provide a specific recall date, however, if they do, they must generally comply with it. The maximum length of a temporary layoff is specifically defined in the Employment Standards Act (“ESA”). If an employee’s layoff lasts even just one day longer than the specified time set out in the ESA, then the employee has been terminated retroactive to the first date of the layoff. As a result, that terminated employee is entitled to pay in lieu of notice and severance. The definition of temporary layoff according to the Employment Standards Act is as follows:
What constitutes termination 56 (1) An employer terminates the employment of an employee … if, …If the specific requirements for a layoff to be considered “temporary” are not met than that layoff is a termination. In a nutshell (and explained in more detail below), if your layoff lasts longer than the temporary layoff time periods or does not meet any of the conditions set out above, the employer is considered to have terminated the employee’s employment. The employee will therefore be entitled to termination pay, severance or damage for wrongful dismissal
(c) the employer lays the employee off for a period longer than the period of a temporary lay-off.Temporary lay-off (2) For the purpose of clause (1) (c), a temporary layoff is,
(a) a lay-off of not more than 13 weeks in any period of 20 consecutive weeks;
(b) 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,
(i) the employee continues to receive substantial payments from the employer,
(ii) 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,
(iii) the employee receives supplementary unemployment benefits,
(iv) the employee is employed elsewhere during the lay-off and would be entitled to receive supplementary unemployment benefits if that were not so,
(v) the employer recalls the employee within the time approved by the Director, or
(vi) 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;
Temporary Layoffs of More than 13 Weeks but less than 35 WeeksA layoff more than 13 weeks but less than 35 weeks, can only be considered temporary where at least one of the following conditions are met:
- The employee continues to receive substantial payments from the employer;
- The employer continues to make RRSP, pension plan, or group health and/or dental insurance plan contributions;
- The employee receives supplementary unemployment benefits (or would be entitled to receive this benefits if not for the employee having alternative employment during this period); or
- the employer recalls the employee within the time approved by the Director.
Ongoing “Substantial Payments” or Benefit Plan Contributions by EmployerThe payments contemplated under 1 and 2 need to have been made throughout the entire period of the temporary layoff in order to satisfy this condition. If the employer did not make regular and on going payments during the first 13 weeks of the temporary layoff or stopped making payments at any time, this condition is not satisfied. The term “substantial payment” is not defined and will likely depend on any individuals particular employment circumstances. Employers and employees should consider getting legal advice on this requirement because it will be highly case specific. With respect to benefit plans, specifically, the terms of the plans provided by the employer must be the same as before the layoff began (unless the employee specifically agreed to an amendment to the plan or the amendment was made for a legitimate cause such as a legislative change). Employers cannot drastically cut benefits and then continue making the reduced payment in an attempt to get around this requirement.
Supplementary Employment Benefit (SUB) PlansThe Government of Canada offers a program called the Supplementary Unemployment Benefit Plans (SUB Plans) that provides employers with the ability to set up and provide additional financial assistance to employees during a period of layoff due to temporary stoppage of work, training, or illness, injury or quarantine. If an employer has a SUB plan, employees will likely already know about it. This plan provide to employees a top up of some amount over and above EI. For more details consider the Government of Canada’s Guide to Supplementary Employment Benefit Program.
Approval by Director of the Ministry of LabourIn special circumstances the Director of the Ministry of Labour can provide exceptions to certain employers. Employers would be obliged to inform their employees.
Other Frequently Asked Questions
How do employees recall temporarily laid off employees?During a temporary layoff, an employer upon notice to their employee, can set a recall date requiring the employee to return. Typically, this is done by the employer providing a “recall notice” informing the employee of the return to work date.
What happens if an employee is recalled in a situation where the layoff was wrongful or not temporary?If an employee is provided with a recall date that either (a) falls outside or afoul of the temporary layoff provisions in the ESA, or (b) in the course of a layoff that was never permitted in the first place, then the employee has two options:
- Return to work and abandon his claim to termination pay, severance pay and/or damages for wrongful dismissal; or
- Refuse to return to work and claim constructive dismissal,