Temporary layoffs under scrutiny

Employers in Alberta who take advantage of a section of the <i>Employment Standards Code</i> that allows them to temporarily lay off a worker for up to 60 days could find themselves on the losing end of a wrongful dismissal battle.

Employers in Alberta who take advantage of a section of the Employment Standards Code that allows them to temporarily lay off a worker for up to 60 days could find themselves on the losing end of a wrongful dismissal battle.

That’s what happened to a travel company that put its finance manager on temporary layoff after business nose-dived in the wake of the Sept. 11 terrorist attacks.

The Alberta Court of Queen’s Bench said a temporary layoff essentially means the worker’s life, both economically and legally, is put on hold while she waits to see if her employer is going to bring her back within the 60-day window.

In Turner v. Uniglobe Custom Travel Ltd., Justice J.S. Moore said the employee’s common law right to treat her layoff as a termination trumped the employer’s ability to temporarily suspend her employment and that she was entitled to compensation for wrongful dismissal.

If the court was wrong in that opinion, then it said the legislature may have to step in to clarify whether the layoff provisions in the code are meant to take precedence over an employee’s common law rights. It also said that, under the current legislation, the potential exists for employers to abuse employees by temporarily laying them off, calling them back for a short period of time, and then laying them off again.

Economic downturn

Heather Turner worked for Uniglobe Custom Travel for more than 15 years. On Oct. 1, 2001, she was called into her supervisor’s office and told she was being temporarily laid off because of the downturn in the travel industry following the Sept. 11 attacks.

Turner, who thought a temporary layoff and termination might be forthcoming, immediately responded with a letter of her own that stated, among other things, that under Alberta law she was entitled to a minimum of eight weeks’ severance plus her outstanding vacation pay.

The supervisor read the letter and told Turner to gather her personal things and leave the office. They were civil and polite to each other when they said their goodbyes.

Turner hired a lawyer, who sent a letter to Uniglobe on Oct. 18. The letter said the layoff amounted to wrongful dismissal and Turner was entitled to 18 months’ wages in lieu of notice.

On Oct. 30, 2001, the company sent a letter directly to Turner, bypassing her lawyer. Uniglobe said it was ending the layoff and Turner was expected back at work on Nov. 5, 2001. It also said the position would last for 12 months.

Turner did not return to work, and the matter went to court. The employer took the position she had resigned, while Turner maintained her claim of wrongful dismissal.

Notice of layoff

The court was critical of the fact Uniglobe did not give Turner any notice that it was going to temporarily lay her off.

Citing the Alberta Court of Appeal’s 2004 ruling in Vrana v. Procor Ltd., the court said employers have an obligation to provide fair notice to the employee of its intention to invoke a temporary layoff.

In Vrana, the Court of Appeal said a temporary layoff puts the employee in the following position:

•the employee is without work and without pay, having been laid off;

•the employer is under no obligation to pay the employee any wages or benefits during the 60-day time frame;

•the employee cannot treat the layoff as a termination or repudiation of the employment contract before the expiry of the 60-day period, the employee has no assurance that the layoff will ever end;

•the employee is limited in a search for alternative employment during that 60-day period; and

•the employee has no assurance that if she returns to work for a period of time, for example 10 days, that the layoff will not recommence thereafter.

Therefore, at a minimum, employers have an obligation to provide notice to employees, the Court of Appeal said.

In Turner, Justice Moore said Uniglobe failed to give proper notice and did not communicate effectively with her about its intentions.

The code comes under scrutiny

While Justice Moore said this case really turned on the basis of inadequate notice, the court tackled the bigger issue of whether or not the ability to temporarily layoff a worker trumped a worker’s common law right to treat the layoff as a dismissal.

The court in Vrana did not resolve this issue. But the Court of Appeal said the ability to temporarily layoff an employee for up to 60 days meant the employee’s common law rights were temporarily suspended. Therefore, an employee could not treat her employment as terminated until the end of the 60-day period if she had not been called back. At that point, she would have the same rights as an other employee dismissed without cause.

But Justice Moore had a different opinion. Though there has been very little judicial scrutiny of the layoff provisions in Alberta, other Canadian jurisdictions with similar legislation have tended to favour interpretations which preserve the common law right of an employee to treat a layoff as a termination, said Justice Moore.

Justice Moore also said this interpretation would prevent a scenario of abuse that was painted by the Court of Appeal in Vrana: that an employee could be caught in a revolving door layoff scenario where she was repeatedly laid off, recalled for a short amount of time and then laid off again.

“If I am wrong in this interpretation, then legislative reform may be in order to clarify whether the layoff provisions are to take precedence (over an employee’s common law rights), and also to protect employees from being subject to revolving door layoffs,” said Justice Moore.

The Alberta Court of Queen’s Bench warded Turner 11 months’ wages in lieu of notice.

For more information see:

Turner v. Uniglobe Custom Travel Ltd., 2005 CarswellAlta 1059 (Alta. Q.B.)

•Vrana v. Procor Ltd., 2004 CarswellAlta 469, 25 Alta. L.R. (4th) 201, 346 A.R. 389, 320 W.A.C. 389, 35 C.C.E.L. (3d) 68, 2004 ABCA 126 (Alta. C.A.)



Court looks at B.C., Ontario cases

In making its ruling in Turner, the Alberta Court of Queen’s Bench took a close look at legislation and case law outside of Alberta to see how other jurisdictions handled temporary layoffs and an employee’s common-law rights.

Justice Moore said the leading Ontario case with respect to an employee’s right to treat a layoff as a termination is Style v. Carlingview Airport Inn, a 1996 decision. In that case the court rejected the employer’s argument that the Employment Standards Act permitted an employer to lay off an employee without terminating the employment contract.

In doing so, the Ontario court said the act does not affect common law rights and obligations regarding dismissal and constructive dismissal.

In Martellacci v. CFC/INX Ltd., a 1997 decision, the court found the employee had been wrongfully dismissed on the basis that Ontario’s Employment Standards Act set out minimum standards only and did not “remove or reduce any rights which an employee has at common law.”

In Martellacci, the court said compliance with employment standards legislation is not in and of itself a defence to a common law action for wrongful dismissal actions.

A similar conclusion was reached by the British Columbia Supreme Court in Collins v. Jim Pattison Industries Ltd., a 1995 decision.

In that case the employer argued there had been no termination of employment because the employment standards legislation stated that layoffs of less than 13 weeks did not constitute termination.

The B.C. court said, “the act does not grant all employers the statutory right to temporarily lay off employees, regardless of the terms of their employment contract. Rather than creating new rights, the act appears to be qualifying employment agreements in which the right to lay off already exists.”

In making its ruling in Turner, the Alberta Court of Queen’s Bench said one must query whether these Ontario and B.C. cases were persuasive in Alberta.

In Vrana v. Procor Ltd., the Alberta Court of Appeal found they were not because the provisions in B.C. and Ontario employment standards legislation were not identical.

But in Turner, Justice Moore said the legislation was close enough that one couldn’t simply ignore the decisions in the above cases.

For more information see:

Style v. Carlingview Airport Inn, 1996 CarswellOnt 779, 18 C.C.E.L. (2d) 163 (Ont. Div. Ct.)

Martellacci v. CFC/INX Ltd., 1997 CarswellOnt 885, 28 C.C.E.L. (2d) 75 (Ont. Gen. Div.)

Collins v. Jim Pattison Industries Ltd., 1995 CarswellBC 276, 11 C.C.E.L. (2d) 74 (B.C. S.C.)

Latest stories