When going about the decision to lay-off an employee, it
is important that you are aware of your rights to ensure the
lay-off is valid and cannot be determined to be a termination by
the courts. Ontario courts have consistently found that an employer
cannot lay-off an employee unless there is an explicit or implied
term in the employment contract permitting the lay-off –
despite the existence of lay-off provisions in the Employment
Standards Act, 2000 ("ESA").
So what does this mean for employers in
Ontario?
If a contract has an explicit term permitting lay-off then
you do not need to worry – you can validly lay-off the
employee.
If there is no explicit term permitting lay-off, you will
have to prove that the term was implicit if you want to proceed
with the lay-off. Examples of cases in which a term
permitting lay-off was implied include Greene v.
Chrysler Canada Ltd. (1982), 7 C.C.E.L. 166 (B.C. S.C.);
affirmed (1983), 7 C.C.E.L. 166 (B.C. C.A.) and MacKenzie
