Collective agreements govern layoffs; more difficult under employment standards legislation
Question: In a non-unionized environment, can an employer lay off employees who voluntarily request it? If so, would it be only a temporary layoff or can it be a permanent layoff as well?
Answer: Another issue coming up frequently these days is the use of temporary layoffs. First, to clarify a common misconception, “layoffs” can only be temporary. A “permanent layoff” would be a dismissal, with all of its associated repercussions. Many people use the term “laid off” to refer to a dismissal without cause — and, correspondingly, “dismissed,” “terminated,” or “fired” to refer to for-cause dismissals — but that does not accord with the legal application of these terms.
Often, employers will seek to temporarily lay off employees, rather than dismiss them, when business is slow but expected to pick up again. Unfortunately, there is widespread confusion regarding the right, or lack thereof, to do so. In the vast majority of cases, employers do not have the right to lay off non-unionized employees. Doing so will constitute a constructive dismissal.
The right to lay off employees on a temporary basis must be an explicit or implied term of the employment agreement or an explicit term of a collective agreement. That right can be implied from the nature of the industry or workplace in question. For example, it is quite common within the construction industry. Obviously, the safest approach is to have a clear clause in a contract granting the employer the right to do so.
Subject to the comments above relating to the previous question, it is possible for the parties to agree to change an existing employment agreement at any time. The key is to avoid a finding of constructive dismissal by ensuring it is a mutual agreement, with consideration flowing both ways. An agreement that effectively gives the employer the right to lay off an employee temporarily can be entered into, though the employer should be careful to comply with the terms in the applicable legislation. Among other things, employment standards legislation sets out maximum periods for temporary layoffs. Exceeding those periods will result in a deemed dismissal, which will trigger all of the usual obligations on the part of the employer.
Clearly, in difficult economic times, there is a need for organizations to reduce labour costs. It is often beneficial if the parties can be creative in seeking solutions that will minimize the impact on both sides. Temporary layoffs or reduced hours may serve everyone’s interests better than reductions in the workforce. No matter what alternatives are being considered, it is important to consider not only the potential savings, but also the costs and risks that might be involved.
