Authors: Stephanie McDonald and Baldeep Sodhi
If you receive a lay-off notice, you may have the right to immediately claim that your employment has been constructively dismissed (terminated) and obtain a severance package.
Many employees assume their employer has the right to lay them off, but that’s not always the case. That’s why it’s so important to understand what your contract says and what the law allows. Trying to figure this out on your own can be stressful and risky, but you don’t have to go through it alone. At Workplace Sage Legal, we are here to guide you through the process and make sure your rights are protected every step of the way.
What is a lay-off?
A lay-off happens when your employer cuts back or stops your work altogether, and stops paying your regular wages. In some circumstances, your employer may continue your health and pension benefits, or other substantial remuneration for your employer.
However, your employer doesn’t have an automatic right to place you on a lay-off. There must be an express or implied contractual term.
Accordingly, when your employment is laid off, you should consult with a lawyer and ask them to review your employment contract to determine if your employer had an express or implied right to lay you off.
Does your Employer have the right to lay you off?
There are two types of terms that can give your employer the right to lay you off: express and implied.
An express term would include any written or verbal terms of employment that provide your employer with the right to place you on a lay-off in accordance with the terms of the Ontario Employment Standards Act (“ESA”).
An implied term would include any context or conduct that provides the employer with the implied right to place you on a lay-off. For example, there are several industries where lay-offs are generally expected. For example, seasonal establishments like outdoor water parks, ski hills, patios, restaurants, etc. Another example is project-based industries like construction or project management. In these industries and establishments, there may be an implied term allowing your employer to place you on a lay-off. However, the analysis is very fact-specific so you should contact an employment lawyer to review the details of your particular situation.
Additionally, if you have previously agreed to a lay-off in the past, this may have provided your employer with an implied right to lay you off again in the future. This is why it is extremely important that you consult with a lawyer the first time you are laid off.
If your employer DOES NOT have the right to lay you off
If there are no express or implied terms giving your employer the right to lay you off, the lay-off amounts to a constructive dismissal, and you are entitled to your termination and severance entitlements under the ESA and reasonable notice under the common law. This isn’t just about salary either. This can include bonuses, commissions, pension contributions, and benefits you would have received during that notice period.
Keep in mind, that employers often try to minimize severance offers. To make sure your rights are protected, it’s important to have a lawyer in your corner. If you’re facing a lay-off and aren’t sure what comes next, don’t hesitate to reach out.
If your employer DOES have the right to lay you off
If your employer does have the right to lay you off, they cannot lay you off indefinitely. The Ontario Employment Standards Act (“ESA”) has rules about when a lay-off becomes a termination. If your employer does not continue any of your pay or benefits, your lay-off becomes a termination after a period of 13 weeks off in any period of 20 consecutive weeks. If you continue to receive substantial payments from your employer or your pension or health benefits were continued, your lay-off becomes a termination after a period of 35 weeks in any period of 52 consecutive weeks.
Once the lay-off transforms into a termination, you are entitled to your termination and severance entitlements under the ESA and the common law.
What to do if you receive a lay-off notice
- Don’t accept the lay-off right away. Accepting the lay-off without asking questions and obtaining legal advice could affect your legal rights, especially if there’s no lay-off clause in your contract.
- Keep notes of everything. Keep copies of any emails, and letters and take notes of conversations related to your lay-off. These details can be crucial if you need to make a legal claim.
- Speak with an Employment Lawyer. Have an employment lawyer review your contract to determine if there is an express term allowing the employer to place you on a lay-off. Also, remember every situation is different, and lay-offs aren’t always as straightforward as they seem. A lawyer can help you understand whether this might be constructive dismissal and what compensation you could be entitled to.
Conclusion
Losing your job, even temporarily, can be overwhelming. But you don’t have to figure it all out on your own. At Workplace Sage Legal, we help employees understand their rights and take the right steps forward. If you’ve been laid off, let’s have a conversation. We are here to listen and guide you through your options with clarity and confidence, and without judgment.
