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Clarifying the term Layoff

People often used the term “laid off” to describe a termination due to a shortage of work. That is not what it means. A layoff pursuant to the Employment Standards Act (ESA) happens when an employee is temporarily sent home with some expectation that they will be recalled to work when things pick up. That is not a termination.
 
Pursuant to the ESA you can be laid off for up to 35 weeks if your benefits coverage is continued or, if there were no benefits or they are discontinued, up to 13 weeks. If you’ve not been recalled within those time limits you are deemed to be terminated.
 
But judges in courtrooms have long held that regardless of the wording of the ESA, a layoff can be a termination and judges will award pay in lieu of notice based on an employee’s age, level of responsibility and seniority if they find it to be a termination. The ESA only deals with minimum payments under that Act. Judges are in charge of the maximums.
 
If it is an explicit term of your employment, either through something written or clear past practice, that you can be laid off temporarily, a layoff will not be a termination.
 
Most collective agreements contemplate temporary layoffs. Some employers have a provision in their policy handbook or individual written contracts confirming that layoffs may occur as a result of s shortage of work.
 
Even if nothing in writing exists, if you’ve been working for a company for ten years and either you, or the people around you have been routinely laid off when things slowed down and then called back, you will have a difficult time claiming that a layoff is in fact a termination.
 
If you are ever laid off and would prefer to treat it as a termination, make sure to get good advice and be careful about refusing an offer from the employer for you to return to your old job.
 
After 15 years of loyal service as a facilities manager, Martin was told one day, at the age of 59, for the first time ever, that he was being laid off for three months.
 
Martin understood that it was nothing personal and that there were clear economic reasons for the layoff. Others had lost their jobs altogether. Martin was personal friends with the owner and understood that they were just trying to cope with hard times. A few weeks after the layoff he was asked to come into work to fill in for an absent employee and he did, asking to bank the time as a credit after he got back to work.
 
Six weeks after the layoff he was asked to come in to fill in for the gatehouse guard, a function he had done from time to time. He refused and five days later his lawyer issued a Statement of Claim for wrongful dismissal.
 
The employer’s lawyer sent a letter offering to return him to his facilities manager job with no change in status and pay as of the three-month mark.
 
Martin refused and the lawsuit proceeded.
 
Martin did very little to look for work for a long time but eventually found a job as a truck driver after 15 months.
 
I am not sure that the results at trial made the whole thing worth his while.
 
The judge had no trouble finding that the original layoff was in fact a termination. That makes sense. How could there be a right to tell a 15-year employee that next week they will not have a pay cheque in the absence of some sort of agreement that that might happen?
 
Terminated employees have an obligation to mitigate their damages; to look for and accept reasonable alternative employment. Martin couldn’t really provide any excuses as to why he refused to go back to his old job. He said himself there were no hard feelings. He was awarded three months’ lost wages to cover him from the date of layoff to the date he could have gone back to his old job.
 
Over the years I have been consulted by many angry employees who have been “laid off” out of the blue and are considering taking the position that they have been dismissed. In most cases, despite the legal remedies that are available, people will decide to wait and see if they are actually called back if they have not already found a better job.
 
Ed Canning practices labour and employment law with Ross & McBride LLP, in Hamilton, representing both employers and employees. You can email him at ecanning@rossmcbride.com.
 
Ed Canning
Ed Canning
P: 905.572.5809
ecanning@rossmcbride.com