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The COVID-19 pandemic has led to extremely high levels of layoffs.

There are, in essence, two types of layoffs: temporary and permanent. In the event of a permanent layoff, the employee will not return to work and, in exchange, is provided with financial support to find another job.

In a temporary layoff, by contrast, the employee is not guaranteed financial support directly from the employer.

Temporary layoffs generally apply in limited circumstances, such as in factories when an assembly line may be suspended temporarily. COVID-19 has, however, resulted in an exponential jump in the number of businesses placing individuals on temporary leave, rather than permanently severing their employment (with accompanying severance packages).

Why does it matter if I have been placed on temporary leave?

Employees on a temporary leave of absence do not continue to receive compensation. In fact, they may receive no pay and instead must simply wait to see if they will be recalled to work. Further, if they choose not to return to work after being recalled, then they will be deemed to have resigned from employment, with no entitlement to a severance package.

Layoffs, therefore, leave employees in a difficult position, whereby they can lose significant exit packages to which they would normally be entitled. The consequences are therefore significant for employees, particularly those who have worked for several years, only to be placed on an unpaid layoff.

Temporary Layoffs may result in severance packages

A recent case (Coutinho v Ocular Health Centre) directly addressed layoffs and entitlements to severance packages during COVID-19. The case involved an employee who had started employment with a health centre in 2014 and was promoted to the position of Office Manager. She was subsequently placed on a temporary layoff from her role.

The employee then brought an action against her employer for constructive dismissal. As a part of the claim, she sought both the amounts owing under the Employment Standards Act and the related common law as support while she looked for another role.

The employer argued that the actions of the employer did not fit the definition of constructive dismissal, particularly since the Infectious Disease and Emergency Leave (“IDEL”) provisions provide employers with flexibility with respect to changing hours of work and wages. The IDEL was introduced in large part as a response to the pandemic’s impact on the labour market and the need for many businesses to suddenly shut down operations in relation to public health orders.

The judge disagreed and found that the IDEL only applied to available remedies under the Employment Standards Act, and therefore did not apply to civil remedies. Specifically, the judge ruled that if an employee’s common law rights to notice were to be limited, then the government would have done this, rather than limiting the IDEL to the Employment Standards Act.

Therefore, an employee could decide that their temporary layoff is in fact a termination of employment and seek their rights under the common law.

The court further pointed to the fact that an employee has the right to pursue common law remedies separate and apart from the remedies available under the Employment Standards Act.

Why Does This Case Matter?

While the case may not apply in all circumstances, it does demonstrate that employers could be liable for constructive dismissal in the event of a layoff.

This case recognizes that constructive dismissal may result from temporary layoffs, even if it is a result of COVID-19. Employees may therefore be able to secure significant entitlements for wrongful dismissal in relation to temporary layoffs during the COVID-19 period.

The case also services to reiterate the purpose of a reasonable notice period, which is to provide sufficient support for a dismissed employee to find new/comparable employment.

If you believe you have been wrongfully dismissed, constructively dismissed, or are on a temporary layoff from your position and are seeking advice, we encourage you to contact Toronto employment lawyersSultan Lawyers, at 416-214-5111 or via email at khayward@sultanlawyers.com.


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