Temporary layoffs: The courts giveth, and the courts taketh away
Never assume you have the right to temporarily lay an employee off
Aug 25, 2014
By Stuart Rudner
In my May 28, 2013, post, Do employers have right to temporarily lay employees off due to shortage of work?, I discussed the decision of the Ontario Superior Court of Justice in Trites v. Renin Corp., which seemed to be a radical departure from previous jurisprudence.
As I wrote, the law has always been that, by default, there was no right to temporarily lay an employee off — doing so constituted a constructive dismissal. This was, pun intended, trite law.
However, in Trites v. Renin Corp., despite decades of court decisions to the contrary, the court held as follows:
“In my view, there is no room remaining at law for a common-law claim for a finding of constructive dismissal in circumstances where a temporary layoff has been ruled out in accordance with the terms of the ESA.”
In other words, the court intended to change the law and grant employers a right they previously did not have — the right to temporarily lay employees off due to a shortage of work even if that had not previously been negotiated or implied.
Notably, in the Trites case, the plaintiff was ultimately successful due to the fact the employer in Ontario did not comply with Employment Standards Act provisions with respect to temporary layoffs. As a result, the issue of whether the employer had the right to temporarily lay Mr. Trites off was a moot point or, in legal parlance, obiter dicta. This term refers to portions of a legal judgment that are not the determinative aspect and are therefore not necessarily binding on future decisions. In other words, they do not necessarily establish a precedent.
The decision in Trites was not appealed, and it has taken more than a year for another court to consider it. However, the Ontario Small Claims Court recently addressed a situation in which a part of the case related to the employer's right to temporarily lay off an employee. The defendant employer relied upon the decision in Trites. However, this argument was rejected by Deputy Judge Hagan, who held that the statement in Trites was obiter and not consistent with previous decisions. As a result, Deputy Justice Hagan declined to follow Trites.
To be clear, I want to note that even though the Employment Standards Act, 2000, in Ontario sets out parameters with respect to temporary layoffs, it does not grant the right to lay someone off. It merely regulates what can be done if that right already exists. This has caused much confusion over the years.
These recent events are a reminder to both employers and employees that the law is fluid and that even though a point may seem to be clear at law one day, it can change the next.
For employers, this is a situation where the courts giveth, and the courts taketh away. You should still never assume you have the right to temporarily lay an employee off. If that is a right that you want to have, it should be explicitly set out in a contract of employment. While you may be able to rely upon an implied right, based upon the nature of the organization or the industry (construction, for example), it is always more compelling to have clear written evidence of the intention of the parties.
For employees, you should not assume that your employer has the right to simply tell you to stay home for a few weeks without pay. In most cases, doing so will be a constructive dismissal, and you will have legal remedies as a result.
Stuart Rudner is a founding partner of Rudner MacDonald LLP in Toronto. Follow him on Twitter @CanadianHRLaw
. He can be reached at firstname.lastname@example.org