Poor Guy Carbonneau, dismissed yesterday as head coach of the Montreal Canadiens. But don’t shed a tear for Guy, because like most coaches and players in professional sports leagues, he will receive his full pay for sitting at home and spending time with his family. The Toronto Raptors are still paying Sam Mitchell millions of the dollars, while Sam has been working on his golf game back home in Atlanta. This happens because elite athletes and coaches usually have ‘term’ contracts, that require the employer to pay their salary for the duration of the term, regardless of whether the employee is dismissed before the end of the term.
Most of us aren’t so lucky. Many employees (sadly, more and more) have term contracts, but they are short (6 months, 1 year), and are used as a way to allow the employer flexibility and to avoid having to give lengthy notice periods. Most of us have ‘indefinite term’ contracts, which means there is no end date in the contract–it continues until one party ends it. In that case, both statute (employment standards) and common law (reasonable notice) require the party ending the contract to give notice that they are doing so.
Sadly, many employees are being ‘laid off’ these days. ‘Layoff’ can be a nice way of saying sacked, if there is no intention of recalling the employee. Sometimes, the employer does hope to recall the employee, so the layoff is called “temporary’. Unionized employees can be temporarily laid off because collective agreements usually give employers that right. For non-union employees, on the other hand, a temporary layoff is usually a ‘constructive dismissal’, because individual employment contracts rarely grant the employer the right to tell an employee not to come to work for a while. That means that a non-union employee who is ‘temporarily laid off’ will often have a choice of accepting the layoff with the hope of a recall, or treating the layoff as a termination, and claiming notice pay. So, when it comes to layoffs, unionized employers have more ‘flexibility’.
On this point, I received an interesting ‘comment’ to yesterday’s entry about the agreement between GM and the CAW that has frozen wages and imposed user fees on CAW members. I asked in that entry whether an employer could have imposed pay freezes and other user fees on non-union employees. Reader ‘CN’ wrote:
In regards to your question for your employment law students, you may be interested to know that GM is effectively unilaterally imposing these sorts of cuts to its non-union employees.
For instance, GM engineers in Canada(who are not unionized) will experience a 3 – 4% pay cut as of May 1, 2009. Anyone who wishes to can refuse to sign the salary reduction agreement. However, there is the understanding that those who refuse will be placed at the top of the chopping block for the next round of lay offs (to take place in mid-April).
It would seem their counsel is hoping that the employee’s agreement, or the low amount of the salary reduction, or both, will allow GM to effectively avoid any constructive dismissal claims. Perhaps in this time of economic hardship, GM’s counsel has concluded keeping your job is a form of “consideration”?
What do you think of GM’s treatment of the non-union employees? Is GM violating the employee contract?