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Employers beware: The myth of temporary layoff may result in a wrongful dismissal liability

This post is an excerpt from the following article.

The primary purpose of this article is to examine, in a non-union setting, some instructive British Columbia cases on the “temporary layoff” provision in the B.C. Employment Standards Act  (“ESA”) with a view to providing the reader some guidance on the subject matter by setting out governing principles for its interpretation. The author will conclude by suggesting the temporary layoff definition of the ESA should be amended to more clearly reflect the intent of the statute as articulated in recent court decisions.

temporary layoff

The ESA, in section 1, provides an exclusive definition of “temporary layoff” as follows:

temporary layoff” means

(a) in the case of an employee who has a right of recall, a layoff that exceeds the specified period within which the employee is entitled to be recalled to employment, and

(b) in any other case, a layoff of up to 13 weeks in any period of 20 consecutive weeks;

Subparagraph (a) exclusively deals with a unionized context because the term “right of recall” is also defined in the ESA and relates only to such rights in a collective agreement.  It is subparagraph (b) that addresses the non-unionized context and is the subject of this paper.

In the same section, the ESA provides an inclusive definition of “termination of employment that specifically includes a layoff, but excludes a “temporary layoff”.

termination of employment” includes a layoff other than a temporary layoff;

On the plain language of the definition of “termination of employment”, there appears to exists a difference between a “layoff” and a “temporary layoff” and when considered with the definition of “temporary layoff” in section 1, it is indeed conceivable why some may and do view the ESA as granting an employer a right to effect a “temporary layoff” that does not equate to a termination. However, the ESA does not provide a definition of “layoff” itself nor in clear or any language, outside the definition of “temporary layoff”, set out an affirmative statutory right of an employer to layoff an employee temporarily.  As a result, the legislation’s precise intention on this issue is, in fact, unclear and requires interpretation.  In particular, can an employer temporarily layoff employees in hard times, and avoid the pecuniary consequences of termination?

A reference to the etymology of “layoff” shows that it was once by nature a temporary status, but has developed into a euphemism for permanent termination:

layoff also lay off; 1889, “rest, respite;” from lay (-) + off. Via seasonal labor with periodic down time, it came to have a sense of “temporary release from employment,” and by 1960s was being used somewhat euphemistically for permanent releases of masses of workers by employers.

Dictionary.com, “layoff,” in Online Etymology Dictionary. Source location: Douglas Harper, Historian. https://dictionary.reference.com/browse/layoff. Available: https://dictionary.reference.com. Accessed: October 12, 2010.

The Courts came to the same conclusion in Girling v. Crown Cork & Seal Canada Inc. Justice Saunders examined the term “layoff”, comparing the union and non-union contexts.  He concluded that no “middle ground” existed in the non-union context because of the lack of any right of recall.  A “layoff”, he said, was just a euphemism for termination :

13     In my view the meaning which the company seeks to give to the term “layoff” is inappropriate to a non-union setting, which is governed by the law of employer and employee. A collective agreement in a union setting often includes layoff and recall provisions: in a union setting it is common for employees who lose their employment, temporarily or permanently, to have the right of first call to a job for which the employee is qualified which becomes available within a negotiated time period. This contrasts with the non-union setting where, in the absence of express provision in an employment contract or legislative protection, there is no right to first call to an available position.

14     Because the employee who loses his or her employment in a non-union setting usually has no right to be re-employed once his or her employment is terminated, the term “layoff” in the non-union setting has no technical meaning. It is simply a euphemism which connotes loss of employment without attribution of wrongdoing to the employee. It is often used to explain loss of work through reduction in the work force or plant closure and always means the employee is no longer actively at work. The law of employer and employee does not have a middle ground between employment and termination such as proposed by the company. [emphasis added]

Thus the term “layoff” is synonymous with termination unless a right of recall exists expressly or implicitly in the employment contract. Then what is the effect of the ESA concept of a “temporary layoff”?  In particular, this begs the question of how this statutory concept of a “temporary layoff” interacts with the common law concept of layoffs that is a termination of the employment relationship.

At common law, it is the fundamental nature of an employment relationship that the employee attend work and receive payment for that work. A layoff, even if temporary, is a radical change to the very root of the employment relationship and would therefore be grounds for a claim in constructive dismissal.

The full article can be found here.

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