Temporary layoffs not a fail-safe solution

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Employers who think temporary layoffs protect them from legal claims may be in for a rude awakening after a leading employment lawyer warned that isn’t always the case.

“Even in cases where an employer has complied with the temporary layoff provisions of the Employment Standards Act, the layoff does not protect the employer from a successful claim in constructive dismissal by the employee at common law,” says Matthew Curtis, an associate at Dentons law firm.

Curtis made the comments following a recent case in which 15-year veteran Giuseppe Bevilacqua sued his former employer, Gracious Living Corporation, for wrongful dismissal.

The 59-year-old facilities manager was told by his employer that he was being temporarily laid off but would be recalled in three months – his benefits were also set to continue during the period.

However, Bevilacqua took the position that he had been effectively terminated when he was placed on layoff and launched legal action – ultimately, the Ontario Superior Court of Justice agreed.

“The Court agreed with the employee, and held that absent a provision in the employee's employment contract allowing for a temporary layoff, a unilateral layoff constituted a constructive dismissal, regardless of whether it was done in compliance with the Act,” explained Toronto-based Curtis.

However, despite the apparent win, Bevilacqua came off badly in the final decision. Justice Ed Morgan noted that the man had declined reemployment after three months and had therefore failed to mitigate his damages.

“There was nothing either in law or in interpersonal relations with his employer that prevented him from accepting the offer to return,” said the judge – awarding Bevilacqua just three months’ pay in lieu of notice rather than the 15 months’ that he had been seeking.

“Employers who wish to place employees on unpaid layoff should use this case as a reminder to update their employment agreements to provide for the right to unilaterally impose temporary layoffs in accordance with the Employment Standards Act, 2000 without further notice or compensation,” advised Curtis.

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