It can be illegal to temporarily lay off workers in virus crisis
Many still have wrongful dismissal protections
In 41 years of practice, I have never encountered this degree of palpable fear. It’s no longer just fear of COVID-19, as economic fear may have become even more pronounced.
Canadian businesses have ground to an unparalleled halt with most employees sent home to work — or just sent home. With no business, employers are concerned about meeting their financial obligations and even surviving.
To the extent employers are imperilled, employees are even more so. Anticipating the depth of the problem, many employers are already turning to layoffs as well as outright dismissals of employees. Given the depth of this economic dislocation, it will be difficult for workers to find other forms of employment. Prime Minister Justin Trudeau’s initiatives, helpful as many are, barely address the depths of this dilemma.
Many employers will find that working from home, for many jobs, is not feasible and provides comparatively limited economic benefit. But with employers exposed to potential massive litigation by anyone who contracts the virus in their workplace if they fail to take appropriate steps to keep it virus-free, employers are concerned about letting employees, as well as customers and the public, into their offices.
The steps employers have to take, before anyone should be allowed to attend work, include continuing to pay the salaries of any employees experiencing viral symptoms, those who have had contact with anyone who did and any employee who returned in the past two weeks from abroad. They also must ensure their offices are disinfected and employees are practising social distancing at work.
But there is an even more vital issue employers are dealing with today, which has the most immediate impact on Canadian employees: Employers are turning to temporary layoffs for the duration of the crisis, while employees, believing they have no choice in the matter, are accepting those layoffs.
The employment standards legislation in most provinces provide for temporary layoffs of various lengths depending upon whether benefits are continued or not for their duration.
But the courts are clear. A temporary layoff of a non- union employee is, by law, a dismissal and employees who are laid off are entitled to full wrongful dismissal damages of up to 24 months or more depending upon their circumstances.
As one court put it: “At common law, an employer has no right to lay off an employee. Absent an agreement to the contrary, a unilateral layoff by an employer is a substantial change in the employee’s employment, and would be a constructive dismissal.”
This case illustrates the point. Giuseppe Bevilacqua was 59 years old and had worked for 15 years for Gracious Living as a facilities manager. Giuseppe had personal friendships with the owners of the family business. But Gracious Living, at the time, was in economic difficulty and downsized accordingly.
Bevilacqua knew that the layoff was not personal but still felt shocked when it occurred. The owners told Bevilacqua to apply for employment insurance and maintained his company benefits and phone. Both parties expected the layoff to be temporary and, at one point, he even returned to work for a day to fill in for another employee. As his boss testified, “He was a trusted employee, so he was there to stay.”
But Bevilacqua refused to accept being laid off and sued.
As the court noted: “This attitude on the part of Gracious Living is borne out by its actions (at the end of the layoff ), they simply offered Mr. Bevilacqua his job back, with no demotion, no change, and apparently no hard feelings. During the entire layoff period, everyone at Gracious Living had remained on friendly terms with ( him) and, indeed, continued to call him for advice and information on matters pertaining to the company. The relationship between him and his employer was, and continued to be, quite friendly.”
The court noted: “The Ontario Court of Appeal has held that a unilateral layoff by an employer is, absent agreement to the contrary, a substantial change in employment, and that it therefore constitutes a constructive dismissal: An employer has no right to impose a layoff either by statute or common law, unless that right is specifically agreed upon in the contract of employment. The fact that a layoff may be conducted in accordance with the Employment Standards Act is irrelevant to the question of whether it is a constructive dismissal. Gracious
Living was not legally authorized to simply place ( Bevilacqua’s) employment status on hold without pay and expect that this will not constitute a constructive dismissal.”
“This lack of a right to lay off an employee applies even or where the layoff is temporary in nature.”
This does not mean that an employee cannot agree with their employer to be laid off subject to recall. They are entitled to some time to consider their choice.
As the court in the case noted, citing another decision of the Ontario Court of Appeal, “an employee in Mr. Bevilaqua’s position is entitled to the opportunity to assess his new- found situation for a reasonable period of time in order to come to a decision as to whether to accept it.”
Ironically, if an employee refuses to accept the layoff and sues, they may find themselves offered their job back much more quickly than if they had accepted the layoff. Since Gracious Living offered Bevilaqua his job back after three months, his damages were limited to that even though he chose not to return. Ironically, a claim for wrongful dismissal incentivizes employers to offer employees their jobs back as early as possible to reduce their damage claim.
There are circumstances in which a layoff is not a constructive dismissal. The first is if the employee has signed a contract permitting the employer to lay her off subject to recall. Few Canadian employers have that in their contracts, but it’s something they should consider. The second is a seasonal or other business, such as a summer camp or the construction industry, where layoffs are anticipated. The last is if that employer has a well- known practice of layoffs and recall.
I would think that a government compulsory shutdown would also permit a layoff of employees without recourse. But that only applies to relatively few industries, such as restaurants, which the government has specifically ordered be shut down, not to the majority of employed Canadians.
So layoffs, work- sharing, reduced hours and wages, which is the natural response of employers trying to preserve jobs, are all potential constructive dismissals. It’s very tough on employers who generally wish to do the right thing. But without severance, and with new jobs a distant prospect in the current environment, employees also need — and legally have — protection.
Many other issues have arisen, including rights of employees to pay if they are sent home to quarantine; the position of cashiers or front line medical workers who cannot perform their jobs while maintaining a distance of six feet from other workers or members of the public, and the private arrangements employees can make with their employers who are ordered to work from the office but are uncomfortable doing so.
I will devote a column shortly to inquiries that I receive, so feel free to email me at hlevitt@levittllp.com.
There are circumstances in which a layoff is not a constructive dismissal.