Job Layoff or Termination? Legally They Are Different

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Job Layoff or Termination? | Author: Bram Lecker

Layoff or Termination? Legally They Are Different.

Mass job losses make headline news. Some of the largest employers in Ontario are undergoing closure, restructuring or staff reduction. Lowe’s and GM are the most recent candidates in this line-up of corporate giants that also included Target, Sears and Loblaws in the past. When reporting these unfortunate stories, news organizations tend to use the terms layoff and termination interchangeably. Yet in fact, there is a real and tangible legal difference between the two.

Temporary Layoff

A temporary layoff is exactly that, a temporary pause in employment. It usually occurs when employers are traversing tough economic times. They need short-term cost cuts to stay afloat. In Ontario, the Employment Standards Act, 2000 (“ESA”) permits temporary layoffs under two very specific circumstances. Your employer can lay you off for a maximum of 13 weeks within a 20 consecutive week period; or they can do so for a maximum of 35 weeks within a 52 consecutive week period.

In the latter case, you remain an employee of the company and still entitled to your benefits. Your employer must inform you of your expected return date. They must also provide you with sufficient notice of the impending layoff to allow you to plan and manage your finances. However, if this is not possible, they must compensate you with notice pay in lieu, thereof.

Job Termination

If your temporary layoff exceeds the limits described above, then under the law, your employer has most likely  terminated your employment. In many events, you may entitled to at least minimum termination pay. This, unless your employer alleges a rare for-cause termination with proven and demonstrable willful misconduct.

If you seem to be going through endless cycles of “layoffs” and rehires by the same employer and the conditions do not meet either situation described above, then there is a good chance you are caught up in a sham layoff.

Sham Layoff

The real reason why any employer would engage in a sham layoff is strategic and some may say, actually dishonest. Most employers know very well that terminations come with a cost. Many want to avoid this impending “butcher’s bill” and they do so by taking the less-than-high-road. They suspend employment by invoking a “layoff”. With it, they take a reprieve of at least 13 weeks payroll. Not only does a layoff sound better than a termination, some use it underhandedly to lull their hapless employees into docility.

By frustrating and starving these employees for three months, they hope to force them into leaving and finding employment elsewhere. And with it, magically, their severance obligations disappear! The scheme could actually work except for two things. 1) The very loyal nature of employees. If they believe they will be recalled, most employees will hang on for as long as they can before looking for alternative work, and 2) Our courts, who clearly recognize that if it looks and smells like a termination, it is.

Specifically, if your employer does not declare a recall date on your Record of Employment or purposely neglects to continue your benefits program, then you need to hire an employment lawyer right away. This is a sham layoff and you likely have a case for wrongful dismissal.

Reforms On the Horizon

The most common victims of such precarious hiring practices are low wage food service, retail and hospitality  workers. At the request of employers, they are placed as “temps” or “contract workers” by not-so-arms-length temp agencies. While they perform full time work, they often receive minimal training to perform dangerous tasks. They frequently work irregular and unpredictable hours. In addition, they have little job security and none of the benefits associated with full time employment. Some are “laid off” when business slows down and then promptly hired right back at the whim of the employer.

In fact, such practices are not entirely against the law. Presently, you can actually hire seasonal or temporary workers and impose regular “layoff” terms. They can occur several times during the year. This commonly occurs in industries like farming and construction. A key point to look out for here is whether your employer has a historical pattern of regular layoffs or if this is a one time occurrence after a period of long uninterrupted employment. The latter is a sham layoff unless it comes with a recall date.  .

The Ontario Government is now scrutinizing such employment practices.They are modernizing the decades old ESA to address these pervasive employment practices. Specifically, they hope to solidify employee rights so the employment relationship does not remain as one sided as it has been. These revised standards for minimum wage and hiring practices will be effective January 2018.

Layoffs and Federally Regulated Employees

The Canada Labour Code (“CLC”) governs employment standards for employees working in federally regulated industries, such as banks, airlines, telecommunications companies and Crown Corporations, such as Canada Post, etc.

According to the CLC, if your employer conducts a layoff with no intention of a recall, then they may be  terminating your employment. As a result, they may owe you termination pay. In fact, due to a recent decision by the Supreme Court of Canada, the law now imposes strict guidelines for employers terminating federal employees.

Lecker & Associates are employment and disability lawyers successfully representing employees for over 35 years. Our Employee Rights Blog is updated frequently and we invite you to visit regularly about matters concerning your rights and entitlements as employment.

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