A Layoff is a Constructive Dismissal but a Failure to Accept a Recall will Limit Damages
June 28, 2016
The Ontario Superior Court of Justice recently concluded that an employer’s imposition of a layoff in the absence of a contractual clause permitting a layoff can be treated as a repudiation of a fundamental term of the employment contract even in circumstances where an identifiable recall date is provided at the time of the layoff.
The employee worked as a facilities manager for fifteen years with the employer. In September 2014, the employer told him that he was being temporarily laid off and that he would be recalled three months later in December 2014. The employee took the position that the layoff amounted to constructive dismissal and commenced an action for wrongful dismissal.
In concluding the layoff amounted to a constructive dismissal entitling the employee to damages, the Court noted that compliance with the Employment Standards Act, 2000 when affecting a lay-off is irrelevant to the question of whether a layoff is a constructive dismissal. The Court then proceeded to award the employee three months’ pay as damages, representing the employee’s pay that he would have received for the duration of the layoff (as opposed to the fifteen months’ pay in lieu of reasonable notice being claimed by the employee in the lawsuit). The Court reasoned that the employee was only entitled to receive pay for the duration of the layoff because the employee’s failure to accept a recall on the exact terms in place prior to the layoff was unreasonable and therefore amounted to a breach of his duty to mitigate.
This decision underscores the importance that express terms in an employment contract can play in an employment dispute and also the consequences of an employee rejecting a reasonable offer of re-employment.
Bevilacqua v Gracious Living Corporation 2016 ONSC 4127 (CanLII)