Suppose you are an employee who was placed on temporary layoff. During the layoff, you obtain new employment, which you intend to be temporary, until you are recalled to work. Does accepting this new employment constitute resignation from your previous position?
The answer is not the same in every circumstance; however, in two recent cases, it was found that the employee had not resigned by accepting new employment.
The Law on Layoffs
The Employment Standards Act, 2000 (“ESA”) provides rules that are applicable to temporary layoffs, including the maximum length of a layoff. The default limit is that a layoff can be no more than 13 weeks in any period of 20 consecutive weeks.
When certain criteria are met, for example when the employer continues to pay premiums towards the employee’s benefits plan, then the layoff can last longer than the default limit, but it still must be less than 35 weeks in any period of 52 consecutive weeks.
If the layoff extends longer than the applicable limit, then it is deemed to be a dismissal, effective on the first day of the layoff.
However, the ESA does not give employers the right to unilaterally lay off employees. Under common law, if the employee does not consent and there is no agreement allowing for layoffs, a unilateral layoff constitutes constructive dismissal. As found by the Ontario Court of Appeal in Elsegood v. Cambridge Spring Service (2001) Ltd.:
At common law, an employer has no right to lay off an employee. Absent an agreement to the contrary, a unilateral layoff by an employer is a substantial change in the employee’s employment, and would be a constructive dismissal.
Therefore, unless the employee consents to a layoff, an employer is allowed to lay off an employee only if there is a contractual term allowing them to do so. Otherwise, the employee can claim constructive dismissal against the employer.
Accepting New Employment During the Layoff
The question of whether accepting new employment during the layoff constitutes resignation was considered in the Ontario Labour Relations Board (“OLRB”) decision of Filtervac International Inc. v Brent Goldrickand in the recent Small Claims Court decision of Hurlbut v Low & Low Limited.
Filtervac
In Filtervac, the employee Mr. Goldrick was employed from March 11, 2013 until March 29, 2019 when he was placed on temporary layoff. The decision does not discuss whether the employer had a contractual right to place Mr. Goldrick on a layoff.
Approximately 12 weeks after the start of the layoff, Mr. Goldrick advised his employer that he had obtained new permanent employment. A few days later, the employer emailed Mr. Goldrick to confirm their discussion, as follows:
“As per our conversation last week, I just want to confirm that you now have permanent position. Even though we are still very slow, we might have several new jobs in the very near future and we have to make sure that you are not planning to return. At that point we have to look for an outside help. So please let me know that you consider your present job permanent.”
Mr. Goldrick responded stating,
“Yes I do consider my current position as permanent.”
Despite this correspondence, the OLRB found that Mr. Goldrick did not resign from his employment. The OLRB summarized that “in order for there to be a resignation of employment, the employee must have expressed an unequivocal intention and, through word/deed, acted upon it, also unequivocally.” Specifically, the OLRB found the following:
- Mr. Goldrick’s email did not disclose an intention to resign;
- The employer never asked for a resignation letter, nor was one ever provided;
- The employer never confirmed his understanding that Mr. Goldrick had no intention to return if recalled to work; and
- Mr. Goldrick was never recalled to work.
As the OLRB found that Mr. Goldrick never resigned, and since the layoff extended for longer than the limits prescribed by the ESA, the employer was deemed to have dismissed Mr. Goldrick.
Hurlbut
In Hurlbut, the employee Ms. Hurlbut was employed from December 17, 2018 until she was laid off on March 20, 2020. The parties consented to the layoff, and in fact it was Ms. Hurlbut who first suggested it, as she couldn’t be at work and tend to her children at the same time.
While on layoff, Ms. Hurlbut obtained new employment. After her employer learned that she had obtained new employment, she advised them that “I’ve had to take a temporary job” and that she intended to eventually return to her previous position.
The employer took the position that Ms. Hurlbut could not be employed with both companies at the same time, and that her acceptance of new employment constituted resignation of her previous position. The employer then discontinued her benefits and issued her a Record of Employment.
The Court found that legally, an employee is entitled to hold multiple jobs with multiple employers, unless the employment contract stipulates otherwise, and that Ms. Hurlbut’s acceptance of new employment did not constitute resignation.
Therefore, the Court found that Ms. Hurlbut had been dismissed, effective on the day the employer mistakenly took the position that she had resigned.
Conclusion
Both these decisions highlight that the law on layoffs, resignations and dismissals can be more complex than you might think. The parties’ rights may also depend on the terms of the employment contract. For instance, the Hurlbut case may have been decided differently if the employment contract expressly forbade the employee from accepting other employment.
If you are an employee that has been placed on layoff, or has been presented with an employment agreement that allows the employer to place you on layoff, we can help you navigate your rights.
If you are an employer that is dealing with laid off employees, we can help you ensure that you do not unwittingly dismiss employees and create unnecessary liability for your company.
If you have any questions about your situation or if you would like to get legal advice, please feel free to contact us.
