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No automatic right to temporarily lay off employees

Ontario decision highlights common employer mistake
Employment law
The recent decision of the Ontario Superior Court of Justice in Popescu v. Wittman Canada Inc. is a perfect example of a situation where an employer mistakenly thought that they had the right to temporarily lay off an employee and ended up with liability as a result.

By Stuart Rudner and Anique Dublin

Let’s begin with the key takeaway from this post: Employers should not assume that they have the right to temporarily lay off workers in the event of a seasonal or other slowdown.

Unfortunately, many employers assume they have this right (much like they assume that every employee automatically has a period of probation — see point 2(a) of our recent Year in Review).

The issue is compounded by the fact that some employment standards legislation, such as the Employment Standards Act, 2000 (ESA) in Ontario, explicitly references temporary layoffs and sets out parameters for how they can be implemented and when they will constitute a dismissal. As a consequence, many employers assume that they have the right to temporarily lay off an employee.

But the legislation does not grant this right; it only sets out how layoffs can be implemented if the right already exists. And for that right to exist, it must either be explicitly set out in an employment agreement or, in limited circumstances, implied by the nature of the industry (such as construction) or the practices of the organization.

In the absence of the right to lay off the employee, doing so will constitute a constructive dismissal.

The recent decision of the Ontario Superior Court of Justice in Popescu v. Wittman Canada Inc. is a perfect example of a situation where an employer mistakenly thought that they had the right to temporarily lay off an employee and ended up with liability as a result.

 Background

Petre Popescu was a mechanical engineer at Wittman Canada for 12 years designing continuous desiccant dryers and other products manufactured by Wittman. In 2014, sales slowed considerably for Wittman and, as a result, Wittman decided to lay Popescu temporarily.

The employment agreement between Popescu and Wittman did not mention any right on Wittman’s part to impose a temporary layoff. As a result, Popescu brought a claim against Wittman for constructive dismissal.

Notably, the parties agreed prior to judgment that the temporary layoff constituted a constructive dismissal. The only issue, therefore, was the damages to which Popescu was entitled.

This case should be a reminder to employers that if they want to have the right to lay employees off temporarily, they should incorporate that right into their contracts. At the same time, employees should be aware that they may not have to accept a temporary layoff unless they either agreed to be subject to such layoffs in their contract or it could be reasonably expected in light of the common practices in the industry.

Anique Dublin is a law clerk and office administrator at Rudner Law in Toronto.

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Stuart Rudner

Stuart Rudner, Employment Lawyer and MediatorStuart Rudner is the founder of Rudner Law (RudnerLaw.ca), a firm specializing in Employment Law and Mediation. He can be reached at stuart@rudnerlaw.ca, (416) 864-8500 or (905) 209-6999, and you can follow on Twitter @RudnerLaw.
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