Canadian Employment Law Today

January 8, 2014 CASE IN POINT: EMPLOYMENT STANDARDS When layoff becomes termination: Getting it right from the start Navigating the complex rules that determine layoffs and terminations BACKGROUND THE TERM "layoff" is often used interchangeably with "termination" and "dismissal," but the fact is that, legally, it means something quite different. While the term more accurately refers to a temporary arrangement — either until there is work again or at least providing the opportunity to see if there will be more work before finalizing things — employers can get into trouble if they treat what is in reality a termination as a layoff. If an employer has a business where the work schedule can be uneven and laying off employees is a possibility, it needs to be on top of the applicable legislation in its jurisdiction — or the wording of its collective agreement, if it's a unionized workplace. Employment lawyer Amandi Esonwanne takes a look at layoffs, terminations, and the importance of getting it right from the start. | BY AMANDI ESONWANNE | SOMETIMES, EMPLOYERS need to lay off employees in both unionized and nonunionized workplaces. Such layoffs must comply with the governing employment standards and, where applicable, a collective agreement. The combination of employment standards and a collective agreement creates a complex set of rules that can pose challenges requiring careful negotiation. In Ontario, a layoff can transform into a termination of employment by statutory operation due to paragraph 56(1)(c) of the Employment Standards Act, 2000 (ESA), triggering entitlement to notice of termination and, if applicable, severance pay. In such circumstances — the Ontario Ministry of Labour's Policy and Interpretation Manual tells us — "working notice of indefinite layoff that is of sufficient length" or termination pay in lieu of notice is required unless a statutory exemption applies. Layoff becomes termination Under the ESA, layoff becomes a termination of employment when it lasts longer than a temporary layoff period. Temporary layoff period includes layoff: not longer than 13 weeks in a period of 20 consecutive weeks; or not longer than 35 weeks in a period of 52 consecutive weeks if certain conditions outlined in paragraph 56(2)(b) are met; or not longer than a temporary layoff period agreed to in a collective agreement (such as the period during which an employee has right to recall). British Columbia has a similar provision whereby layoff can also transform into a termi- 4 nation of employment if it lasts longer than a period of "temporary layoff" as defined in that province's employment standards statute (subsections 1(1) and 63(5)). Similarly, under the Alberta employment standards statute, layoff becomes termination when the recall right in an applicable collective agreement expires (paragraph 63(1)(c)). A temporary layoff becomes a termination of employment when it lasts longer than the statutory temporary layoff period, or a layoff period agreed to in a collective agreement. Under the ESA, despite paragraph 56(1)(c), subsection 56(4) permits an employer to lay off an employee without a recall date so long as the layoff does not last longer than the temporary layoff period. However, care must be taken in a unionized workplace where the contractual — as opposed to statutory — temporary layoff period applies. This is because the Ontario Court of Appeal has held that the contractual temporary layoff period is only triggered if a "timely" offer of recall is extended to the employee. A timely recall offer is one that occurs before an employee's employment is deemed to have been statutorily terminated and, in all events, within the maximum recall period fixed by the collective agreement. Consequently, the best practice is to ensure a timely recall offer occurs within either of 13 weeks in a 20 consecutive weeks period or 35 weeks in a 52 consecutive weeks period (if other conditions are met); such offer must indicate the employee will resume work before the expiration of the contractual temporary layoff period. An important element of layoff is the effect of subsection 4(2) of Ontario Regulation 288/01. This convenient provision allows a unionized employer to effectively terminate employment without breaching the just cause provision of its collective agreement, so long as it provides the employee with a written notice of indefinite layoff, which will be deemed to be a notice of termination at the end of the applicable temporary layoff period. Where an employer relies on this regulatory provision — in combination with paragraph 56(1)(c) and subsection 56(5) of the ESA — the notice of indefinite layoff provided to the employee will, if sufficient, satisfy the statutory requirement for notice of termination. If the notice of layoff is insufficient, the employee is entitled to appropriate notice, subject to set-off for any notice provided at the time of layoff (this set-off may not be available if there is a distinct, contractual right to a notice of layoff). As one arbitrator put it, subsection 4(2) of Regulation 288/01 provides employers "an option to manage things differently. Should it prefer, for example, to terminate, or at least provide an immediate notice of termination to its employees in order to generate clarity around which employees may choose to abandon their recall rights, it may opt to issue indefinite Published by Canadian HR Reporter, a Thomson Reuters business 2014 Continued on page 5

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