Layoff constructive dismissal
When can they take the position that they have been constructively dismissed and pursue a severance package? For most the answer is very soon. Although all those letters referred to “lay offs”, at law all of those people were actually on an emergency leave. As a result of changes made by the government to the Employment Standards Act anyone sent home as a result of the pandemic was deemed to be on an emergency leave. They were not “laid off”.
In normal times, the Employment Standards Act says that an employee who is layed off without benefits for more than 13 weeks or with benefits for more than 35 weeks is deemed terminated. For a long time now, however, the courts have said something different. It is the courts that decide how much reasonable notice somebody is entitled to at common law and whether they have been terminated in the eyes of the court. A long time ago the Ontario Court of Appeal said that if it was not an implied or explicit term of someone’s employment that they could be laid off without notice, a lay off could very well be a termination… a constructive dismissal. The present emergency leave provisions end on September 25, 2021. Unless there is a last minute extension many employees not brought back by September 26, 2021 will be deemed to be terminated at common law.
One exception would be employees who have a term in their employment contract or in the employers policy manual saying that lay offs could happen without it being deemed to be a termination. Another exception is employees who have been laid off periodically throughout their tenure and it has become an implied terms of their employment that they can be laid off without notice. All others have a very arguable claim that since they are no longer on emergency leave but now really “laid off”, the regular rules apply. Since they are out of work without notice they have been constructively dismissed and can make a claim for a severance package based on their age, seniority and level of responsibility.
This is a situation where the Employment Standards Act says one thing and the courts have said another. If we just looked at the Employment Standards Act, after September 26th the employee would have to be off another 13 weeks without benefits or 35 weeks with benefits in order to be deemed terminated. The courts, however, have well established that those lay off provisions only apply where an explicit or implied part of an employees terms of employment say that they can be laid off without notice.
At this point employers who cannot bring these employees back have two choices. They can either stay quiet and hope the employee does not hire a lawyer. The employee may not seek out a lawyer if they are persuaded that the employer is doing their best to bring them back and are still in hope of a return to work as things return, hopefully, to normality. The second option that the employer has is to face the music, confirm the termination and make a severance proposal.
For many employers the cash flow implications of these claims will be onerous. They should consider making severance proposals that are based on salary continuance rather than a lump sum so as to manage the situation. For employees, if they do not believe there is any hope of them every returning, they should immediately consult an employment lawyer.
