Lay-offs during COVID-19

This depends largely on what their employment contract says.

Some contracts will have clauses that allow for temporary layoffs so long as employers follow the rules set out in the Employment Standards Act (the “ESA”). This requires that a layoff must be truly “temporary”—meaning it lasts for no more than 13 out of 20 consecutive weeks if employees do not continue to receive pay or benefits; or no longer than 35 out of 52 consecutive weeks if employees continue to receive pay or benefits.

If the layoff lasts longer, employment is considered terminated, at which point the employee is entitled to termination pay (and may be eligible for severance pay) under the ESA. If the contract does not limit the employee to those minimum payments under the ESA, they may also be entitled to reasonable notice at common law, which is generally measured in months rather than weeks. 

What if there is no layoff clause in the contract? Ordinarily, an employer who lays off an employee in this manner risks being sued for constructive dismissal—meaning the employer has so fundamentally changed/disregarded the employment contract that they have effectively terminated the employee. 

But in these unusual times, the answer is less certain. The unprecedented nature of the pandemic, with businesses being restricted or closed by government order, will almost certainly be taken into account by judges determining whether an employer who resorts to layoffs has acted lawfully. There is at least one decision in Ontario (Trites v. Renin Corp, 2013 ONSC 2715) that says layoffs cannot be a constructive dismissal if they follow the rules in the ESA. Employees must also be cautious, as asserting constructive dismissal requires them to state that they have been terminated, thereby giving up the right to be recalled to their job.