Lay-Off
A lay-off occurs when an employer temporarily reduces or stops an employee's work (and therefore pay), without terminating the employment.
Without explicit contractual authorization or agreement by the employee, employers generally cannot temporarily lay employees off. Should an employer attempt to temporarily lay-off an employee without express contractual authorization or consent of the employee, the lay-off may be considered constructive dismissal, as it fundamentally alters the conditions of employment. Refer to Chen v. Sigpro Wireless Inc. [2004] O.J. No. 2280 which states, "The law is clear that the imposition of a lay-off where there is no express or implied term in the contract of employment permitting such, repudiates a fundamental term of the employment contract that the defendant would be employed at an annual salary for an indefinite period and thereby constitutes constructive wrongful dismissal."
Where there is a contractual right for an employer to temporarily lay-off an employee, the employer must comply with the minimum employment standards legislation. Under Ontario's Employment Standards Act, 2000, an employer need not provide a recall date to an employee (subject to contractual provisions that make this a requirement).
The maximum amount of time a temporary lay-off can last is:
- A lay-off of not more than 13 weeks in any period of 20 consecutive weeks;
- 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,
a. the employee continues to receive substantial payments from the employer;
b. 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;
c. the employee receives supplementary unemployment benefits;
d. the employee is employed elsewhere during the lay-off and would be entitled to receive supplementary unemployment benefits if that were not so;
e. the employer recalls the employee within the time approved by the Director; or
f. 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; or
- In the case of an employee represented by a trade union, a lay-off longer than a lay-off described in clause (b) where the employer recalls the employee within the time set out in an agreement between the employer and the trade union. 2000, c. 41, s. 56 (2); 2001, c. 9, Sched. I, s. 1 (12).
If the maximum amount of time is exceeded, then the employee is considered dismissed from employment and the employer is liable for statutory and reasonable notice under the common law. Refer to Martellacci v. CFC/INX Ltd. [1997] O.J. No. 6383 which states, "If the demotion of an employee or a reduction in pay and responsibilities of an employee constitute constructive dismissal, then surely indefinite suspension with no guarantee of recall, no salary and virtually no benefits must also qualify for the same treatment at law."
For recent court decisions in this area, see our blog.