Layoff Article

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January 2, 2009 Page 1

© Stringer Brisbin Humphrey 2009

Can You Lay Off Non-Union Employees?Jeff Murray and Jeremy Schwartz

Employers are continually searching for

ways to cut costs, especially in these difficultand uncertain times. Rather than

permanently downsize, some employers

would prefer to temporarily lay off

employees in anticipation of an economic

rebound. Others have no choice when their

customers implement temporary shutdowns.

Most unionized employers have the

“benefit” of collective agreement provisions

that allow for temporary layoffs. Non-union

employers do not, and must instead look to

the common law and the Employment

Standards Act (ESA) for guidance.

The ESA

The ESA has special rules that determine

when an employer must provide a laid off

employee with notice of termination and

severance pay. These entitlements are

generally owed once a layoff ceases to be

“temporary.”

A temporary layoff is defined as a layoff of

less than 13 weeks in a 20-week period (or in

certain circumstances a layoff of less than35 weeks in a 52-week period). Since layoffs

that exceed these limits are no longer

considered temporary, non-union

employees affected by such layoffs must

receive their ESA entitlements.

This does not mean that employers can lay

off non-union employees with impunity

provided the layoff remains temporary

under the ESA. Temporary layoffs can stilllead to significant liability under the ESA and

common law if the temporary layoff triggers

a constructive dismissal.

In other words, employers do not necessarily

have the right to layoff non-union

employees for any period of time.

The “Right” to Lay Off Non-Union Employees

An essential element of the contract of

employment is the employer’s obligation to

provide both pay and work to theemployee. As a result, Ontario courts have

consistently held that, despite the provisions

of the ESA that address temporary layoffs,

there is no general implied right to lay off

employees. Unless such a right exists a layoff

of any duration will lead to termination of

employment.

Whether the employer has the right to lay

off will be determined on a case-by-case

basis having regard to the following factors:

1. Employment contract – The employer can lay off if the employee is subject to

an enforceable written employment

contract that specifically reserves this

right to the employer.

2. Written Policy – Where the employer has

a written policy advising employees that

temporary layoffs are possible, such a



Employment Law Dispatch



right may be inferred. Such a policy

would have to be communicated to

employees well in advance of the layoff,

such that it would not appear that the

policy was drafted in contemplation of

an impending layoff. How far in

advance such a policy would have to

be communicated would depend on

the circumstances.

3. Past Practice – If employees have been

laid off in the past, courts may find the

employer has an implied right to initiate

layoffs in the future. For non-union

personnel, each employment contract is

treated as an individual one. As a result,even if some other employees were laid

off in the past, this might not give the

employer the right to lay off newer

employees who had never been laid off.

Again, this will depend on the

circumstances.

4. Positions and Industries – Some

employees work in positions or in

industries where layoffs are notorious

and frequent. In these industries the

employer’s right to lay off can be more

easily inferred. For example, it would be

hard for a farm labourer to claim that

the employer cannot lay off in winter.

With that said, the onus always rests on

the employer to prove that layoffs are

customary and expected.

5. Continuation of Benefits – Some courts

have considered it relevant whether an

employer has continued benefits during

a layoff when determining whether a

constructive dismissal has occurred.

Employers may want to consider continuing benefits during periods of

temporary layoff to reduce the chances

a court would find that employees were

constructively dismissed.

Even in cases where employers have the

right to temporarily lay off employees, failing

to give a specific recall date can trigger a

constructive dismissal – because there is no

assurance that the layoff is temporary.

The Duty to Mitigate

Courts will generally require employees who

quit and sue for constructive dismissal to

take reasonable steps to mitigate their loss

of employment. This can put employees

who claim constructive dismissal due to

layoff in a difficult position once work

becomes available at the end of the layoff

period.

In these circumstances, the employee’s

damages may be limited to the period of

the layoff. The is because the court may not

award damages in lieu of common law

notice for any period that the employee

could have worked for the employer after

the layoff. This often provides long service

employees with a disincentive to claim

constructive dismissal in the face of a short-

term layoff.

However, since the duty to mitigate does

not apply to an employee’s ESA

entitlements, the employee may still recover

statutory termination and/or severance pay.

Lessons and Options

Whenever layoffs are contemplated for

non-union personnel:

1. Employers should consider whether they

have the right to initiate layoffs, and

should consult legal counsel for an

opinion.

2. Constructive dismissal can result even if

the layoff qualifies as a temporary layoffunder the ESA.

3. Employers should give advance notice

of any layoffs.

4. Whenever possible, employers should

provide a specific recall date.



Employment Law Dispatch



5. Employers should consider continuing

benefits during the period of temporary

layoff.

For more information contact:

Jeff Murray at

[email protected]

or 416-862-1616 ext. 410

Jeremy Schwartz at

[email protected]

or 416-862-1616 ext. 160

__________________________________________________________________________________________

Employment Law Dispatch is an electronic publication of

STRINGER BRISBIN HUMPHREY

110 Yonge Street, Suite 1100, Toronto, ON M5C 1T4T: 416-862-1616 F: 416-363-7358

65 Cedar Pointe Drive, Unit 806A, Barrie, ON L4N 5R7

T: 705-727-0808 F: 705-727-0323

E: [email protected] I: www.sbhlawyers.com

The information contained in Employment Law Dispatch is general information only

and should not be relied upon as a substitute for legal advice or opinion.

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