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Pinch Hitter Post: The Rules Are the Rules

Posted in Temporary Lay off

Every now and again, it comes time to bring a pinch hitter to the plate.

This week’s post comes from Jordan Kirkness

–  a fellow lawyer at Baker   McKenzie in Toronto, Ontario Canada.

Thanks for the post Jordan!  Dear Readers & Followers – enjoy!

When speaking of the Employment Standards Act and rulings in terms of constructive dismissal, there are times where the interpretation of the rules are more adhered to than the rules themselves.

Here is a case in recent history where the rules are truly the rules.

For years, courts have generally found, absent a specific term of contract, employers do not have the right to temporarily layoff employees.  Courts have often found a temporary layoff will constitute constructive dismissal where there is no written employment agreement (or a well-established industry standard) that provides for a contractual right to temporarily layoff an employee, requiring employers to provide termination notice, or pay in lieu.

This approach appears to be shifting.

The recent decision of Trites v. Renin Corp, 2013 ONSC 2715 (“Renin Corp.“) may signal a change in the common law that will broaden the range of circumstances in which an employer can temporarily layoff an employee without triggering a constructive dismissal.  If the reasoning in this decision is followed by courts in future cases, employers will often be able to temporarily layoff employees, even without a specific agreement that provides for temporary layoff.

Renin Corp. involved a middle management employee, Sandra Trites, who verified financial statements and accounts, and reported to a corporate controller.  Trites worked for the employer for over five years, but she never signed a written agreement.

Renin Corp. (“Renin”) was struggling financially.   Starting in 2008, many employees had been placed on temporary layoff, only some of which had been recalled prior to the end of the “temporary layoff” period as defined under the Employment Standards Act (“ESA“).

On November 15, 2011, Renin notified Trites she would immediately and indefinitely be placed on layoff.  In January of 2012, Renin advised Trites that she would be called back to work as of July 2012.  Thus, if Trites accepted the recall offer, she would be laid off for more than 13 weeks, but less than 35.  During the layoff, Trites was not provided with benefits, or otherwise subjected to circumstances which qualified her for  “temporary layoff” for up to 35 weeks under the ESA.

In any event, by the time of the recall, Trites had commenced an action against Renin claiming constructive dismissal.

At trial, Trites argued she had been constructively dismissed.  Her lawyer cited existing case law which stood for the proposition that a temporary layoff is a constructive dismissal in the absence of a contractual agreement providing otherwise.  Renin argued that because the ESA provided for a temporary layoff period, the common law of constructive dismissal was unavailable to Trites.

Surprisingly, the court found that “there is no room remaining at law for a…finding of constructive dismissal in circumstances where a temporary layoff has been rolled out in accordance with the terms of the ESA”.  This reasoning clearly suggests that employers can, absent a specific term of agreement, temporarily layoff an employee, without risking constructive dismissal, so long as the layoff does not exceed the definition of temporary layoff under the ESA.

So what is really the play by play?

  1. If this were a collective agreement then temporary layoff periods could be part of bargaining.
  2. The Employment Standards Actdefines a temporary layoff as not more than 13 weeks in any period of 20 consecutive weeks, (more notes in ESA Section 56 – use link)

This case stands for the proposition that you can be taken out of the line up for a period of time (in the EAS specification) and you do not have the right to claim constructive dismissal.  What the court has suggested here is that it has simplified the rule book for employers so that as the ESA states “a temporary layoff does not constitute a termination”, it really means that.