What's the difference?
Question: What is the difference between a “termination” and a “layoff” and how can the use of these terms affect the end of an employment relationship?
Answer: A “termination” generally describes a permanent cessation of an employment relationship, while a “layoff” usually refers to a temporary interruption of employment due to lack of work, redundancy or other factors. Employees who are laid off usually have a reasonable expectation of recall, while terminated employees do not.
There are profound differences between a termination and a layoff depending on whether the employee is unionized.
It is a general principle of labour relations statutes across Canada that a unionized employee can only be disciplined or discharged for just cause. However, under most collective agreements, an employer can lay off a unionized worker for lack of work. The procedural requirements the employer must comply with, the length of the employee’s recall rights, and any entitlement to severance compensation will be dealt with in the applicable collective agreement.
With limited exceptions, a non-union employee can be terminated with or without cause. If the employer has cause for dismissal, there will usually be no requirement to provide any working notice or severance compensation. Without cause, the employer can terminate the employee as long as it provides the amount of notice or severance required by the applicable employment standards legislation, and by the express or implied terms of the employment contract.
In the non-unionized context, a permanent layoff is considered in law to be a dismissal and employers do not necessarily have the right to lay off an employee temporarily for lack of work. Whether at common law or under employment standards legislation, there must be an express or implied term providing the employer with the right to implement a temporary layoff. In B.C., for example, the Employment Standards Act allows an employer to lay off a non-union employee temporarily for up to 13 weeks within a period of 20 weeks, but the Employment Standards Branch takes the position that an employer cannot exercise this right unless a layoff is permitted by the express terms of the employment contract, industry practice, or agreement of the employee.
At common law, a layoff will usually give the affected employee the right to claim constructive dismissal, unless layoffs are permitted by the express terms of the employment contract or by well-established practice in the workplace. Courts have ruled this conclusion is not affected by statutory provisions that appear to permit temporary layoffs. In Collins v. Jim Pattison Industries Ltd., the B.C. Supreme Court ruled the temporary layoff provision in the Employment Standards Act merely prescribes the maximum duration of a layoff where the employment contract provides for a right to lay off the employee. According to the court, where an employment contract is silent on the issue of layoff, a layoff is deemed to be a termination warranting pay in lieu of notice.
A similar conclusion was reached in Style v. Carlingview Airport Inn, where the court found the temporary layoff language in Ontario’s employment standards legislation “does not affect common law rights and obligations regarding dismissal and constructive dismissal.”
These decisions were distinguished by the Alberta Court of Appeal in Vrana v. Procor, where the Alberta Court of Queen’s Bench found an employee on layoff cannot bring an action for constructive dismissal until the expiry of the statutory 60-day period. The decision was reversed on appeal, but on different grounds. Nevertheless, the B.C. and Ontario approach has subsequently been followed in Alberta, in Turner v. Uniglobe Custom Travel Ltd., suggesting a consistent approach across jurisdictions.
In most jurisdictions, the best way to ensure an employer has the right to lay off its non-union employees temporarily is a carefully drafted layoff provision in its employment contracts.
For more information see:
•Collins v. Jim Pattison Industries Ltd., 1995 CarswellBC 276 (B.C. S.C.)
•Style v. Carlingview Airport Inn, 90 OAC 83 (Ont. Gen. Div.).
•Vrana v. Procor, 2003 CarswellAlta 137 (Alta. Q.B.).
•Turner v. Uniglobe Custom Travel Ltd., 2005 ABQB 513 (Alta. Q.B.).
