Temporary layoffs of a non-union employee in Canada can potentially amount to a constructive dismissal, which is essentially the right to claim a severance package. In other cases, a temporary layoff may allow an affected employee to claim damages for their lost income during the period of layoff.
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More Information on Temporary Layoffs during the COVID-19 Pandemic – Justified or an Unjust or Constructive Dismissal?
The COVID-19 pandemic has disrupted the global economy in an unprecedented way; in a matter of weeks, provinces across Canada, and counties globally, have locked down. This has caused businesses great financial uncertainty as business declines. Do these circumstances, however, justify the temporary lay-off of an employee?
Scenario 1: Temporary Lay-off Clause in Employment Contracts
If an employee is subject to a written employment contract with a layoff provision, then a temporary lay-off during this time will likely be lawful. This is because the lay-off would not be changing a fundamental terms of employment – the layoff would be consistent and a foreseeable possibility at the time each party entered into the employment agreement. The temporary lay-off provision in the contract would have to be consistent with federal and/or provincial employment laws to be valid and enforceable. Both employees and employers are advised to seek legal consultation in the event there are concerns regarding a temporary layoff, despite there being a contractual clause in place.
Scenario 2: Employee Provides Written Consent for Temporary Lay-off
An employee can consent to a temporary lay-off that would not otherwise be part of their terms of employment. This is permissible, but should not be due to duress. An employee can agree to be placed on layoff temporarily and receive EI or CERB benefits in the meantime.
Scenario 3: Temporary Layoffs are Common in the Industry
If temporary layoffs are inherent within the job or industry, such that there are regular slowdowns, then a temporary layoff during the pandemic may be justifiable. Whether in writing or not, the fact that temporary layoffs happen within the industry means that a temporary lay-off does not change a fundamental term of employment.
Scenario 4: Temporary Lay-off is not Part of the Employment Terms
Lastly, if there is no temporary lay-off clause in an employee’s contract, whether due to the absence of a written employment contract or the contract itself not containing one, a temporary lay-off is a breach of the employee’s terms of employment. An employee here could claim a constructive dismissal due to this fundamental breach, which means the employee can ‘quit’ and seek damages for wrongful dismissal.
The bottom line is that temporarily laying off an employee that is not subject to temporary lay-offs through the regular terms of their employment may trigger a constructive dismissal, especially if the employer’s business has not significantly declined. Employees should seek advice when faced with any of the above scenarios. This is where the lawyers at Whitten & Lublin can help. We are one of Canada’s premiere workplace law firms. Contact us to find out more.
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