Layoff time: monitor it carefully to avoid termination damages

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An Ontario company has been ordered to pay almost $10,000 in common law damages to a worker whose layoff time exceeded the Employer Standards Act (ESA).

Employee Brian Elsegood was laid off for 35 weeks in a 52 week period during 2009, which meant he qualified as having been terminated under the ESA. Using that as a starting point, Elsegood claimed for common law damages for wrongful dismissal. He was awarded $9,900, reflecting a notice period of six months.

His employer, Cambridge Spring Service, tried to argue that because his “deemed termination” came under the ESA, common law should not apply as the two were independent regimes. However, the court disagreed, saying the two forms of law worked together.

Common law entitlements are generally greater than statutory requirements, so there could be an increase in these types of claims, says Filion Wakely Thorup Angeletti associate Carla Nassar.

“The Court of Appeal’s decision is pretty clear that employees are entitled to claim wrongful dismissal damages in respect of this kind of termination,” she says. “I think we are going to see more employees making this kind of claim when their lay off extends beyond the threshold under the act.”

The ESA’s threshold of 35 weeks of lay-offs out of 52 do not need to be consecutive, and do not need to be within the same calendar year. Layoffs of this length are not uncommon with the current economy, especially in industries that can be seasonally driven.

The best way for employers to protect themselves was to monitor how long people were on layoffs and try to bring workers back before the threshold is reached, Nassar says.
 


 

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