Offices in Ottawa and Perth
(613) 722-1500

CONTACT US (613) 722-1500

Share on twitter
Share on facebook
Share on linkedin

Lay-offs: the Dangers of Shooting First and Asking Questions Later

Share on twitter
Share on facebook
Share on linkedin
Share on email

Lay-offs: the Dangers of Shooting First and Asking Questions Later

By:

Posted February 19, 2019

For employers and employees alike, lay-offs continue to be a largely misunderstood area of employment law. Many employers and employees believe that a lay-off occurs when the employer ends the employment relationship on a without cause basis. However, a true lay-off occurs when the employer temporarily stops employing an employee on the understanding that the employee will be called back to work eventually. When business is slow or the employer is overstaffed, laying off employees can appear to strike a middle ground between termination (ending the employment relationship and having to pay termination pay) and continued employment (having to pay full wages).

The Employment Standards Act, 2000, a statute which regulates employment in Ontario, provides that employees can be laid off for up to 13 weeks in a 20 week period. Subject to certain exceptions, the employer must call the employee back within those 13 weeks. If the employee is not recalled, the lay-off is considered permanent and the employee will be deemed terminated. She or he then will become entitled to termination/severance pay and in some instances, wrongful dismissal damages at common law.

Surprisingly, a lay-off can also automatically constitute a termination of employment. This wrinkle in the law is particularly confusing to employers and employees, because lay-offs are provided for in the Employment Standards Act, 2000. It says employers are allowed to do it, right in the Act. Despite this, case law, or judge-made law, has confirmed that in many instances, unless there is a provision in the employment contract allowing an employer to lay-off the employee, a lay-off can constitute a termination of employment. At that point, the employee may be entitled to termination/severance pay and in some instances, wrongful dismissal damages at common law.

For employers, it is important to speak to an employment lawyer to make sure they actually have the right to lay employees off without triggering an automatic termination. For employees who have been laid off, in the absence of a contractual right to do so, they may be entitled to seek wrongful dismissal damages. If their contract provides for lay-off, they need to be aware of the 13-week maximum. There are always exceptions and so it is important to consult an employment lawyer before making these decisions.

This blog post was written by Nigel McKechnie, a member of our Employment Law team.  Nigel can be reached at 613-369-0382 or at nigel.mckechnie@mannlawyers.com.

 

More Resources

Blog |
Environmental Law

By: 

Posted October 14, 2021

In the decision of Greenpeace Canada (2471256 Canada Inc. v. Ontario (Minister of the Environment, Conservation and Parks), 2021 ONSC 4521, released September 3, 2021,[...]
Blog |
Employment, Labour, and Human Rights

By: 

Posted October 1, 2021

This blog continues our exploration of the potential employment law consequences stemming from the degree of control a party exerts within a variety of business[...]
Blog |
Personal Injury

By: 

Posted September 27, 2021

Personal Injury lawyers and their clients are all too familiar with the carnage and suffering caused by impaired drivers.  Canada has the worst rate of[...]
Blog |
Bankruptcy and Insolvency, Business Law

By: 

Posted September 24, 2021

As is noted by the Court of Appeal in McEwen (Re), released August 12, 2021, referred to here as “Traders”, the BIA is a complete[...]
Blog |
Wills, Trusts and Estates

By: 

Posted September 23, 2021

In-Trust For Accounts have become a common way for parents and grandparents to set aside money to finance their children or grandchildren’s post-secondary education. A[...]
Blog |
Business Law

By: 

Posted September 21, 2021

We frequently work with small businesses on a variety of matters, from leasing to employment contracts. As the business becomes more successful, plans often turn[...]

Subscribe to Our Newsletter

Name*
Consent*
This field is for validation purposes and should be left unchanged.