Temporary Layoffs in Ontario

A temporary layoff allows an employer to suspend or restrict an employee’s job for a set period without terminating the employment relationship. In Ontario, the Employment Standards Act, SO 2000 c 41 (the “ESA”), permits temporary layoffs. Pursuant to Section 56(2) a temporary layoff is:

a) A layoff of not more than 13 weeks in any period of 20 consecutive weeks; or

b) A layoff of more than 13 weeks in any period of 20 consecutive weeks, if the layoff is less than 35 weeks in a period of 52 consecutive weeks and,

i. the employee continues to receive substantial payments from the employer,

ii. the employer continues to make payments for the benefit of the employee under a legitimate retirement or pension plan or a legitimate group or employee insurance plan,

iii. the employee receives supplementary unemployment benefits,

iv. the employee is employed elsewhere during the lay-off and would be entitled to receive supplementary unemployment benefits if that were not so,

v. the employer recalls the employee within the time approved by the Director, or

vi. in the case of an employee who is not represented by a trade union, the employer recalls the employee within the time set out in an agreement between the employer and the employee; or

c) in the case of an employee represented by a trade union, a layoff longer than a layoff described in clause (b) where the employer recalls the employee within the time set out in an agreement between the employer and the trade union.

For an employee who has a regular work week (i.e. works the same number of hours each week), the ESA provides that a lay-off is when, in that week, the employee earns less than one half the amount he or she would regularly earn in that week. In addition, the employer is not required to give any notice.

Although temporary layoffs may be a pragmatic solution for these unprecedented economic times, employers should nonetheless be aware of the risks associated with temporary layoffs. Despite the legislative authority, at common law, employers may face damages if the employment or collective agreement does not specifically provide for temporary layoffs. If the agreement is silent, employees may be able to claim constructive dismissal which may entitle them to damages.