A recent Ontario decision has clarified the law on temporary
layoffs and the related impact on employee claims for constructive
dismissal. An employer's temporary layoff of an employee in
accordance with the Ontario Employment Standards Act, 2000
with a fixed return to work date, still resulted in a fundamental
change in the employment contract, thus, constituting constructive
dismissal. The Ontario Superior Court's result in
Bevilacqua v Gracious Living Corporation, 2016 ONSC 4127
(Bevilacqua) highlighted the importance of employment
contract's express terms in such a situation and the
compensation implications of when a laid off employee refuses to
return to work.
Giuseppe Bevilacqua was employed by Gracious Living Corporation
("Gracious Living") for 15 years. On September 15, 2014,
Gracious Living temporarily laid off Bevilacqua due to economic
difficulties with a return date of December 15, 2014. Bevilacqua
was recalled to resume work to his same position on the same terms
but he refused. Instead, Bevilacqua took the position that he was
constructively dismissed and commenced a claim for 15 months'
salary in lieu of notice.
The employment contract had no express term permitting Gracious
Living to place Bevilacqua on a temporary layoff. There was also no
such implied term as the prospect of layoff had never been raised
with him. Gracious Living's compliance with the Ontario
Employment Standards Act, 2000 as to what constitutes
temporary layoff was irrelevant to the question of constructive
dismissal, the Court summarily decided that Bevilacqua was
Employer and employee expectations
The employer's and employee's expectations about the
nature of the layoff do not make the layoff any less of a
constructive dismissal. The Court noted that Gracious Living may
not have intended to terminate Bevilacqua but its actions still
amounted to constructive dismissal. Bevilacqua admitted that he was
told the layoff was temporary, not a termination. During the layoff
period, he kept his company benefits, maintained a good
relationship with Gracious Living and filled in for an employee.
However, such expectations regarding the nature of the layoff
become relevant to determining constructive dismissal damages.
Refusal to return to work
Despite being constructively dismissed, Bevilacqua was under a
duty to mitigate his damages. At trial, he failed to explain his
refusal to return to work. The Court accepted that the layoff was
temporary and was not due to personal reasons and that the return
offer was on the same terms, particularly since Gracious Living
remained friendly with Bevilacqua during the layoff. The Court
decided that nothing in law or in interpersonal relationships
prevented him from accepting the return offer. As a result,
Bevilacqua was entitled to only 3 months of salary equaling the
time period after which Gracious Living offered return to work.
This meant that a claim worth five times as much was reduced based
on the refusal to return to work.
The Bevilacqua decision emphasizes that an employer can
only impose a layoff if it is specifically agreed upon in the
employment contract. This is especially important to keep in mind
for employers in industries that are prone to economic instability
resulting in downsizing. The outcome reminds employers of the
importance of including relevant layoff language where appropriate
in offer letters and employment contracts. If the employer does
decide to proceed with a temporary layoff without an express term,
the employer's behavior towards the employee, its relationship
during the layoff period and the return offer within the specified
period may reduce the damages owed to the employee.
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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