Pick up any newspaper these days, and you will see stories about layoffs. Sometimes those layoffs are permanent.
Do you have to give ‘reasonable notice’ when you permanently layoff an employee due to economic downturn? Can you temporarily layoff an employee, or layoff an employee for an unspecified period of time?
Temporary lay-offs are very common in the unionized setting. But there is not usually an issue about the right of a unionized employer layoff worker. Why?
Because the collective agreement will usually grant employers the right to layoff employees in exchange for rules about the order of layoffs and recalls. So contract specifically grants Er the right to temporarily layoff employees.
But what about a non-union setting. Answer is that, just like in union setting, the right to layoff an employee must be found in the employment contract. Does your standard form employment contract include that right? Most don’t. As a result, when employer layoffs an employee, it is usually breaching contract by disallowing employee the right to come to work. It’s possible a right to layoff could be ‘implied’ into the contract by the court if there is a long history of layoffs at the company and the employee is aware of this practice, but it is not common for courts to find this implied term.
What does that mean?
Means that the employee is entitled to claim notice of termination if you lay them off without their consent. When you layoff an employee, you are probably ‘constructively dismissing’ them, which means you have to give notice of termination. This is what happened in recent case called Davies v. Fraser Collection Services. I wrote a blurb on this case on my blog.
A solution is for you to write into your employment contracts an expressed right to layoff employees on a temporary basis for economic reasons. I have always found it a bit odd that more employers don’t do that.