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Temporary Layoffs in Ontario: Helping Dentists Get it Right

By September 5, 2023July 4th, 2024Employment Law

Running a dental practice can be challenging at times. As an employer, the law does not make it any more straightforward for you. When temporarily laying off an employee, it is imperative to understand the dos and don’ts to mitigate risk and set yourself and your dental practice up for success in the future.

In this post, we will outline the basics of temporary layoffs, its connection to the risk of constructive dismissal and finally, how you can apply this to running your dental practice.

What is a Temporary Layoff?

A temporary layoff is when an employee’s employment is temporarily stopped or significantly reduced. The expectation is that the layoff is not permanent and that the employee will return to work after a certain period.

A dentist (as an employer) may impose a temporary layoff at a dental practice for many different reasons. Some of our previous blog posts discussed the need for temporary layoffs caused by the volatile factors resulting from the COVID-19 pandemic, specifically, the risk of wrongful termination and the Infectious Disease Emergency Leave. Outside of pandemic times, thankfully, where we are today, some common reasons for temporary layoffs could include fluctuations in patient scheduling, unforeseen financial setbacks, or renovations to the dental practice.

What Law Governs Temporary Layoffs?

The Employment Standards Act, 2000 (the “ESA”) and the common law govern temporary layoffs in Ontario. While the law allows employers to temporarily lay off employees, doing so in a way that complies with the relevant employment laws of Ontario is crucial. You may think you temporarily laid off an employee. However, if it opposes the confines of the statute and common law, you could be at risk of a constructive dismissal claim.

Constructive dismissal is when an employer wrongfully terminates an employee or fundamentally changes the employment relationship without just cause or the employee’s consent. We go into a more in-depth discussion in our blog post, Don’t Get Sued By Your Employee: Constructive Dismissal, where you can learn more about what constitutes constructive dismissal and what to watch out for.

Employment Standards Act

Section 56 of the ESA sets specifies (1) what constitutes a temporary layoff, (2) when it can occur and (3) how long it can last.

Per the ESA, a temporary layoff is not a termination of employment – it is an employee who will be returning at a later date. That later date does not need to be specified so long as it satisfies the time constraints (as described below). Further, the ESA does not require the employer to give written notice or reason to the employee that they are implementing a temporary layoff, so long as the employee’s contract does not say otherwise.

There are three situations when a temporary layoff can occur:

  1. When it is included in the employment contract;
  2. With consent from the employee or
  3. If there is an established custom within the industry (which does not apply to the dental industry).

Finally, and arguably the most complicated to understand, the length of a temporary layoff will depend mainly on the circumstance.

  • General Circumstances

Temporary layoffs can last for not more than 13 weeks within any period of 20 consecutive weeks. This applies if it doesn’t meet one of the exceptional circumstances below and a trade union does not represent the employee.

  • Exceptional Circumstances

If the circumstance is one of those listed below, temporary layoffs can last for more than 13 weeks in any period of 20 consecutive weeks but less than 35 weeks within 52 consecutive weeks. These circumstances apply when:

    • The employee still receives compensation from the employer;
    • The employer still makes payments to an insurance plan, pension, etc., on the employee’s behalf;
    • The employee receives supplementary unemployment benefits;
    • The employee is entitled to supplementary unemployment benefits but is not receiving them because they are employed elsewhere or
    • The employee is recalled (i.e., called back to work) within the time frame approved by the Director of Employment Standards.

Note:  In our previous blog post discussing the relevant Gent vs. Strone case, you can learn more about recalling employees.

If you want to temporarily lay off an employee, but your circumstance does not meet the ESA criteria described above, it may be deemed constructive dismissal instead.

Of course, situations can change over time. While the employee is on temporary layoff, you may decide that you would like to let the employee go permanently. In this case, you can provide notice of termination and pay in lieu of notice to terminate the employee. However, probably not surprisingly, this situation also has constraints. Be sure to speak with a DMC lawyer to ensure you terminate the employee correctly and do not expose yourself to a constructive dismissal claim.

Common Law

The other side of the law governing temporary layoffs is the common law derived from judicial decisions. Understanding the common law is also crucial for employers because it differs from the ESA.

In the 2011 decision by the Ontario Court of Appeal in the Elsegood v Cambridge Spring Service case, it was made clear that the common law does not provide an employer with the right to temporarily lay off an employee unless there is an agreement that states otherwise. If it is not clearly outlined in the employment contract that temporary layoffs are permitted, the common law deems the layoff as a termination by way of constructive dismissal.

Part of the reasoning for the decision comes from fundamental contract law, where common law upholds a contract that is not breached. So, if you have an enforceable contract that allows for temporary layoffs and the confines of the ESA are met, employers have the right to temporarily lay off employees under the common law. Without the contract, the employer does not have such rights.

Bottom Line

Employment law in Ontario does not make things simple for employers. If you do not pay close attention to the details of the law surrounding temporary layoffs, it is easy to put yourself at risk of a constructive dismissal claim. That said, maintaining enforceable, properly drafted employment contracts that are up to date puts you in a good position to mitigate that risk. Further, by ensuring that you understand the ESA framework and act within its confines, you set yourself up to be entitled to the minimum rights set out by the statute to temporarily lay off an employee.

At DMC, we help dentists understand the complexities of employment law in a way that is easy to understand. We also draft employment contracts that protect you and your dental practice. Feel free to contact any member of our team to learn more about temporary layoffs or any employment issues. Send us an email or contact any of our lawyers at 416-443-9280.

The Content of this post is provided for informational purposes only. It is not intended to be legal, financial, tax, or other professional advice of any kind. You are advised to contact DMC (or other counsel) to seek specific legal advice concerning your individual situation.