Lay-off or Dismissal, under Ontario Law --It All Amounts to the Same Thing.

Somehow, it has a better ring to it. For most Employees being “Laid-off" is a great deal easier to swallow after long and faithful years of service than a pink slip with the words “Terminated", “Dismissed" or “Fired". Certainly, the term “Laid-off" has connotations that the decision was reached due to circumstances beyond the control of the Employer and with no fault of the Employee. The lack of cash flow and shortage of work are the causes of doom, not the Employee’s performance, or so the story is told. However, this cloud has so silver lining. In fact, many Employers prefer to characterize the termination of employment as a “lay-off" out of genuine sincerity and an attempt to lessen the emotional pain of losing one’s job.

However, there is often a darker hidden agenda to this characterization, designed to guard the Employer’s interests at the expense of the Employee’s rights: On the one hand, there is a subtle message. If the Employee toughs it out, accepts the situation, keeps the peace and above all, does not seek legal help, the situation may be temporary and there will be a chance of recall, at which time the status quo will be re-instated. It is only natural to hope that the upheaval is only temporary. Especially after long service, no one wants to set out on the unknown of a new relationship.

When the weeks melt into months, and no recall arrives, the Employee slowly realizes that he or she has been duped into a false expectation. In the meantime, a precious opportunity has been lost in seeking alternate permanent employment and most importantly, severance entitlements.

With regard to the latter, the Employer’s message is much less subtle. Call the “labour Board" Then an Employee is told after enquiring about entitlements “We can lay you off for 13 weeks and we don’t have to pay you a dime". In the interim, as the bills mount, the Employment Insurance wanes and nothing positive is done to obtain his/her rights, the Employee waits like a hopeful jilted lover. Of course the call never comes. If the Employer had been up front enough to tell it like it is, being indefinitely laid off is a euphemism for being fired without cause, a bitter pill with a sugar coating.

There is a light at the end of the tunnel. In Ontario as in all Provinces in Canada, every Employee who is terminated without just cause is entitled to reasonable notice of termination, or severance In lieu of notice. The amount of notice is based primarily on 3 main factors established over 30 years of judicial decisions known as Common Law: age, position and length of service. There is no special status for “Lay-off" under Common Law; a lay-off is a breach of the Employee’s unwritten contract. Any non-unionized Employee can claim compensation for wrongful dismissal from the day he receives an indefinite lay-off notice and the Employer refuses or is unable to provide the date of recall. What about the 13 week rule? It is true that the Employment Standards Act, 2000 (The Ministry of Labour “The Labour Board") provides for a 13 week lay-off period during which a moratorium is imposed upon the actions of Employment Standards Officers from seeking compensation under the Act. However, this only applies to the minimum statutory termination and severance rights set out in the legislation. The important thing to remember is that the Employee’s Common Law entitlements to claim for wrongful dismissal based on age, length of service and status override the minimums under the Employment Standards Act, 2000. For example, a mid-management Employee, age 50 with 12 years seniority, is entitled to 8 weeks under the Employment Standards Act, 2000, but would be entitled to 12 months at common law.

In fact, an Employee who is “Laid-off’ without recall may have greater rights than the circumstances of an ordinary dismissal. In recent decision of Cagigal v. Mill Dining Lounge Ltd. a Manager of a restaurant with three (3) years of service sued for wrongful dismissal. He had been laid off in March but only told by the Employer in August that there was no longer a job for him. The Ontario Court of Justice found that the Employer did not act reasonably in failing to inform the Employee that he would be dismissed during the period of lay-off. Accordingly, the five (5) months of lay-off were added to the three (3) months of normal severance for a total of eight (8). The court, in effect, said that it is unfair to lead someone along when there is little or no possibility of recall. This notion was expanded upon by the Supreme Court of Canada in the famous Wallace decision. Taking its lead , in Ontario and other Canadian jurisdictions the Courts have gone even further. In the leading case of Martellacci v CFX Inc. * for example, the Court definitively upheld the principal that the 13 week rule is no bar to wrongful dismissal and decisively penalized an Employer for refusing to provide any compensation when it refused to return the laid off Employee (a Purchasing manager) to her pre “lay off" position.

In summary, Employers must inform their laid-off Employees of their true intentions so that the Employees can get on with life and find suitable alternate employment, if not, the consequences will be an enhanced severance package for “ bad faith “ dismissal.

A rose by any other name smells as sweet, except in Employment Law. If the Employer’s intentions are to lessen the psychological blow of a dismissal, the way not to do it is by trying to mislead the Employee into believing that a lay-off has some special status and thereby avoiding its obligations. If the Employer must reduce the workforce for legitimate financial reasons, most Employees will understand. What they cannot understand and the Courts will not tolerate, is some less than straight-forward attempt to characterize a lay-off as anything else than what it is, a termination of employment for which the Employee is entitled to notice or compensation on termination when they need it most.

* the writer was Counsel for the Employee in this matter .

Lecker & Associates Toronto Employment Lawyers provides legal counsel to employees who have been terminated or face other workplace and employment issues. As a strong advocate for employees' rights, Lecker & Associates has been involved in several precedent setting cases.