Laid off office

By: Carol Trudell

The COVID-19 pandemic has ushered in fundamental shifts in our working lives. We have begun to embrace work-from-home and educated ourselves on how to use Zoom. But if you are laid off, your adjustments to the new digital world of work may be delayed [1].

What is a layoff (usually)?

Being laid off happens when your work is stopped or reduced. To be laid off you must be an employee under the Ontario Employment Standards Act (ESA).  Most individuals who are not independent contractors are considered employees under the ESA [2]. An example of an independent contractor is a freelance web designer who works with many different employers. In essence, independent contractors negotiate their own employment contracts. Thus they are not protected by the ESA. In contrast, ESA employees usually only work for one person. If you are an employee, your employer must notify you formally that your work will stop or hours be reduced under the ESA [3]. Once this happens, you are laid off.

The most important characteristic of a standard layoff is its temporary nature [4]. Under the ESA, one cannot maintain employment without compensation for 13 weeks in a consecutive 20-week period. If your layoff period extends beyond 13 weeks, then your employer must provide some type of compensation (such as insurance payments or supplementary unemployment benefits) [5]. If you do not receive compensation during this period, your employment is terminated. This is when you become entitled to termination pay. Note that a lay off can be over 13  weeks so long as it is under 35 weeks in 52 consecutive weeks. If this time condition is not met or compensation stops, your employment is also terminated.

In short, your employer can only lay you off for so long. Eventually, your employment contract is terminated due to the length of the layoff or the time you have gone without compensation. Whereas someone on Infectious Disease Emergency Leave waits to know if they are terminated, someone who is laid off for non-COVID-19-related reasons is terminated after they have exhausted the relevant thresholds under the ESA.

Who can be laid off?

It is employees who can be laid off, but the answer to whether you specifically can be laid off is found in the provisions of your employment contract. If you do not have a contract, fear not: you can’t be laid off. Layoffs essentially require your express consent. Most courts in Canada, Ontario included, have enforced this principle strongly. This means your contract should clearly state if you can be laid off [6]. This usually comes in the form of a layoff clause. If your contract does not state you are eligible to be laid off and your employer attempts to anyway, you are considered “constructively dismissed” [7].

Constructive dismissal is what happens when an employer breaches your employment contract. Employers do this by trying to alter terms of the contract which they cannot manipulate without your consent. In this scenario, the employer effectively terminates their contract with you because they have acted in a way that breaches a fundamental term of your contract. The termination, or “constructive dismissal”, then puts you in the same position as the individual who has been laid off for too long. You are no longer an employee because your contract with your employer is terminated.

 Read our constructive dismissal blog post here

What does this mean for you?

Pending you are an employee under the ESA, the standard lay off timelines and constructive dismal law are applicable to you. If you are laid off right now, ensure your employer is providing appropriate compensation and be cognizant of when your contract is effectively terminated. Conversely, if your employer has tried to wrongfully alter your employment contract during COVID-19, be aware that you are entitled to terminate your contract. Be sure to consult an employment lawyer to understand the full extent of your rights.

Not sure whether you are an employee or a contractor? Check out our AI-powered tools here.