Employer says layoff, court says dismissal

Employers don’t have the right to temporarily layoff a worker unless the employment contract specifically gives it that right

The Ontario Court of Appeal has upheld a lower court’s ruling that underscores the fact that employers don’t have the right to temporarily layoff a worker unless the employment contract specifically gives it that right.

In Chen v. Sigpro Wireless Inc., the lower court said the employer’s decision to temporarily layoff Edward Chen constituted wrongful dismissal. It said the imposition of a layoff, where there is no express or implied term in the employment contract permitting such, repudiates a fundamental term of the employment contract that the employee would be employed at an annual salary for an indefinite period and thus amounted to wrongful dismissal.

Chen was a software engineer who earned about $100,000 per year and did well during his two years at Sigpro. But in February 2003 he received a phone call from a relative in China and got the news that his mother was dying. The next day he spoke with his supervisor and asked for permission to travel to China to see his mother one last time.

He asked to be granted emergency leave, but was instead placed on temporary layoff, a move that shocked and confused him. He was told Sigpro had up to 35 weeks to call him back to work. At the end of that period, if he had not been called back, his benefits would end and he would be entitled to any termination pay and vacation pay he was owed.

Chen travelled to China and got to see his mother one last time before she died in March 2003. When he returned to Canada, he contacted Sigpro to say he was back and ready to return to work. He hand delivered a letter to the CEO stating that, but was told there was no work for him and if there was the company would contact him.

The lower court ruled Sigpro knew ahead of time that it was going to terminate Chen, that it didn’t tell him that when he applied for leave to visit his dying mother and the layoff was designed to benefit the company by postponing a severance payment to Chen.

It ruled Chen had been dismissed without notice or cause on the date he was laid off. He was awarded $51,326.01, consisting of five-months’ notice, outstanding vacation credits, costs incurred in mitigating his damages and loss of CPP contributions. Sigpro appealed the ruling to the Ontario Court of Appeal.

“The trial judge found as a fact that the purported temporary layoff of (Chen) … was in fact a termination of (his) employment,” the Court of Appeal said. “He also found that the termination was without notice or cause. These findings are fully supported by the evidentiary record and we cannot interfere with them.”

For more information see:

Chen v. Sigpro Wireless Inc., 2005 CarswellOnt 952 (Ont. C.A.)

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