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Employers in Canada do not have an unlimited right to lay off their employees.

The biggest reason for this is Canadian courts believe employees should be provided with income support to find another job. Layoffs do not provide this. Rather, layoffs allow employers to suspend an employee’s work without any income support.

Instead, the law has consistently stated that layoffs should only be used in limited circumstances, such as where an employee’s employment contract has specifically addressed this possibility.

By contrast, termination of employment triggers a wide range of employer obligations, including pay relating to employment standards and, potentially, common law notice payments (which could be months of financial support), intended to financially support the employee until they find other employment.

For this reason, where it is unclear whether an employee has agreed to be laid off (for example, where an employment contract does not address layoffs) and the employer proceeds to layoff the employee, the employee may have a claim for constructive dismissal on the basis that he or she was laid off without an agreement in his or her contract allowing for this.

If an employer violates a term of an employee’s contract, the employee may be successful in claiming that they have been constructively dismissed (and therefore that they should be provided with all the payments associated with termination).

Specifically, constructive dismissal occurs when the unilateral action(s) of an employer fundamentally alters an essential term of an employee’s contract such that a reasonable person would conclude that the employer no longer intends to be bound by the terms of the contract. Constructive dismissal does not, however, occur where the employee accepts the change(s) or does not make it known to the employer that he or she does not agree with the change.

Employees who are successful in making a constructive dismissal claim would be entitled to damages as if their employment was terminated.

It is important to note, however, that on May 29, 2020, the Government of Ontario introduced Ontario Regulation 228/20 – Infectious Disease Emergency Leave. This Regulation automatically converts a temporary layoff to a job-protected leave.

During the leave, the timelines for temporary layoffs as set out under the Employment Standards Act, 2000 do not apply as you are considered to be on a job-protected leave and not a temporary layoff. This leave applies during the duration of the COVID-19 Period, which is expected to end on January 1, 2022. Beginning on January 2, 2022, treatment of legislation in relation to temporary layoffs and constructive dismissals will resume as previously applied before COVID-19.

If you have been laid off, had your employment terminated and/or want to understand your employment rights please contact Toronto employment lawyers, Sultan Lawyers at 416-214-5111 or via email at khayward@sultanlawyers.com.

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