Contrary to popular belief, a temporary layoff usually constitutes a wrongful dismissal which requires an employer to pay the
This general rule does not apply in all situations such as when your employment contract states that the employee can be temporarily laid off, or your organization has a history of temporarily laying off an employee, or temporary layoffs are customary in your industry.
If your organization decides to temporarily lay off an employee despite the potential legal liability, is the employee required to accept a recall?
This question was considered in a recent case.
The court considered whether
The Legal Test
The legal test in this situation is whether or not a reasonable person would accept the recall to work that
When considering this question the court indicated it would consider the following factors: is the salary offered the same; are working conditions substantially the same; is the work demeaning; are the personal relationships acrimonious; the history and nature of the employment; whether or not the employee has commenced litigation; and whether the offer of re-employment was made while the employee was still working for the employer or only after he or she had already left.
When considering these factors, the judge accepted the following statement from the Supreme Court of Canada: The critical element is that an employee “not [be] obliged to mitigate by working in an atmosphere of hostility, embarrassment or humiliation.”
When applying the test to the facts, the judge concluded: “I am of the view that a reasonably objective individual in his circumstances would not have concluded that returning to work would be too embarrassing, humiliating, and/or degrading.
Lessons to Be Learned
- A temporary lay off can inadvertently trigger a wrongful dismissal which can trigger significant termination pay obligations.
- One way to reduce an employer’s legal liability to pay termination pay in a temporary layoff situation is to include a clause in the organization’s employment contract which gives the employer the right to temporarily lay off an employee as the term is defined in Ontario’s Employment Standards Act.
- Another way to reduce an employer’s legal liability to pay termination pay in a temporary layoff situation is to recall the employee to work. To keep this option available it is very important to, among other things, maintain good relations with the employee before the temporary layoff. As mentioned above, a judge will unlikely consider it reasonable to expect an employee to be recalled into “an atmosphere of hostility, embarrassment or humiliation.”
For almost 30 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him directly at 416-317-9894 or at [email protected]
In the recent decision of Andros v Colliers Macaulay Nicolls Inc., the Ontario Court of Appeal (“OCA”) found yet another termination clause to be unenforceable. In this decision, the OCA reaffirmed and clarified various principles surrounding the enforceability of such clauses.
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