Labour & Employment Law Update
A Cautionary Tale about Temporary Layoffs

A recent decision of the B.C. Supreme Court, Besse v. Dr. A.S. Mechner Inc., 2009 BCSC 1316, serves as a reminder that employers do not have the right to lay off employees temporarily (and without severance) unless this right is specified in the employment agreement.  In this case, a dentist was seeking to reduce the staffing costs associated with his practice.  He contacted the Employment Standards branch and was provided information to the effect that an employer is not required to give notice or pay compensation in lieu if an employee is temporarily laid off for a period not exceeding 13 weeks.  Given this information, the dentist informed one of his receptionists that she was being laid off for a period of 12 weeks and six days.  While the information provided by the Employment Standards Branch correctly summarized the temporary layoff provisions of the Employment Standards Act, it did not take into consideration the common law requirements relating to a layoff.

Counsel for the employee subsequently advised the dentist that the employee considered herself to have been constructively dismissed as there was no right to layoff/recall under the employment agreement.  On learning of his error, the dentist wrote to the employee offering her a return to her position and payment of any lost wages due to the layoff.  The employee refused the offer and sued for damages for wrongful dismissal.

At trial, the court confirmed that in the absence of an express contractual provision permitting layoff, the imposition of a temporary layoff constituted a fundamental breach of contract.  Even though the temporary layoff in this instance was not intended to terminate the employment relationship, the layoff was a repudiation of an essential term of the employment contract.  The plaintiff was entitled to treat the layoff as a constructive dismissal.

However, the plaintiff was not as successful in obtaining an award of damages.  Applying the decision of the Supreme Court of Canada in Evans v. Teamsters Local Union No. 31, 2008 SCC 20, the court found that the facts established no good reason why a reasonable person would refuse the offer to return to her former position.  As a result, the plaintiff’s damages were limited to the approximately one month period between the date of her layoff and the date of the offer to return to employment.

The decision serves as a reminder that if an employer wishes to take advantage of the provisions under the Employment Standards Act for temporary layoff, the right to layoff must already exist, either as an express term of the employment agreement or as implied term based on established industry practice.  The temporary layoff provisions in the Employment Standards Act only serve to limit an employer’s exposure to pay Employment Standards Act severance.  Employers may wish to consider revising their employment agreements to permit temporary layoffs as provided under statute.  The decision further serves as a reminder that the Employment Standards Branch can only give advice about the provisions of the Act and does not have the ability to give more general legal advice including advice relating to the relationship between the provisions of the Act and common law requirements.

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