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With a myriad of layoff notices having been issued in March, we expect that a significant number of workers will be soon be recalled to their previous roles. We do not, however, expect that all employees who were laid off will be offered their jobs back. Instead, we expect that many thousands of Canadians will be informed that their employment is permanently terminated.

We believe this will be the case because COVID-19 has had a dramatically negative impact on the economy, which will almost certainly lead to at least an interim drop in demand for goods and services, and therefore continued strain on many businesses’ revenues.

In anticipation of this reality, the following provides our response to the top three (3) layoff and termination related questions we have received.

The deadline for my layoff has passed and I have not been recalled to work. Can I consider that my layoff has become a termination of employment?

Yes. If your employer fails to recall you to work within the prescribed statutory deadline, you may treat the expiry of the temporary layoff as a termination of your employment.

In Ontario, a layoff can generally last up to thirteen (13) weeks, or up to a maximum of thirty-five (35) weeks where the employer continues to provide some payment to the employee, such as a continuation of employee benefits.

Therefore, if your employer fails to recall you during the prescribed period (and/or does not comply with the requirements for a longer layoff period), then you may treat it as a termination of employment.

If your employment is terminated, you are legally entitled to be provided with at least the minimum statutory notice or pay in lieu of notice (in addition to severance pay, where applicable). You may also be entitled to payments in lieu of “reasonable” notice (as determined by the common law) of the termination of your employment. This can be significantly more than the statutory amounts (possibly months or even years’ worth of pay), where you have not contracted out of this right (via contract or otherwise) and/or replaced the employment income during this period. If an employer fails to provide adequate notice, you will likely have cause to bring an action for wrongful dismissal.

How will my entitlements be impacted if my employment is terminated following a layoff during the COVID-19 era?

There is a lot of discussion about how courts will treat terminations in the COVID-19 era. Specifically, the question is whether courts will provide larger severance packages to employees who will likely find it harder to find employment (at least in the interim) because of the dramatic drop off in hiring.

The law is clear that “availability” of comparable employment is a relevant factor for courts to consider in determining how much notice (or pay-in-lieu of notice) an employee is entitled to upon the termination of their employment. While courts may have some sympathy for employers, many of whom are facing serious difficulties, it is nevertheless possible that employees will be granted “outsized” packages where their employment is terminated in a labour market impacted by COVID-19.

Specifically, if your employment contract does not restrict you to the statutory minimums (and even where it does these clauses are often determined to be unenforceable), the court generally looks at the following four factors which have a disproportionate impact on determining the reasonable notice period, including the character of employment; the length of service; the age of the employee; and the availability of similar employment.

In particular, the availability of similar employment is likely to be a significant factor considering COVID-19 and the devastating impact on the Canadian labour market, which has undoubtedly made it more difficult to secure alternative and comparable employment.

What government supports are available for terminated employees following a permanent termination of employment as a result of the COVID-19 pandemic?

Employees who have not been recalled to work following the expiry of their layoff and/or who have had their employment permanently severed following a return to work may be eligible to collect either Employment Insurance or the Canada Emergency Response Benefit (“CERB”).

It is important to note, however, that any government benefits can be either (1) delayed (until after a notice period and/or after completion of payments associated with pay in lieu of notice) or (2) “clawed” back (subject to refund) for a certain period where you are provided with a package after the termination of your employment (i.e. following negotiations with the employer and a settlement).

If you have any questions relating to COVID-19 and your employment, whether you have been temporarily laid off, or wrongfully dismissed, or if your employer failed to recall you to work, please contact Toronto employment lawyers Sultan Lawyers at 416-214-5111 or via email at mlahert@sultanlawyers.com.


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