Temporary Layoff

When business softens, employers look at different ways to reduce labour costs.

One option is to temporarily lay off workers until business picks up. Selecting this option can be a big mistake.

We get calls from employers who have temporarily laid off employees only to receive a letter from a lawyer claiming the laid off employee has been wrongfully dismissed. After reviewing the situation, we often advise the employer that the employee has likely been wrongfully dismissed.

 “What do you mean I owe the guy termination pay?”

“The Ministry of Labour told me I could temporarily lay him off without providing him with any notice of termination.”

This is one of those times when employers are exasperated by the employment laws in Ontario.

It is true that an employer can often avoid providing notice of termination of a “temporary” layoff under the Employment Standards Act. An employer cannot generally, however, avoid providing reasonable notice of termination in connection with a temporary layoff at common law.

The good news is that by reserving the right to temporarily layoff an employee in an employment contract, an employer can avoid the common law obligation to provide reasonable notice. As long as the contractual provision complies with the Employment Standards Act, it is generally enforceable.

Lessons to be learned: Make sure you obtain employment law advice before laying off an employee. Always require employees to sign an employment contract.

To download a copy of our publication, 20 Areas to Consider When Conducting Your Own Workplace Audit, please visit wwww.macleodlawfirm.ca/employers.

If you have questions about employment contracts or employee layoffs, please contact us at [email protected] or call us at 1-888-640-1728 anytime