Recently, the Ontario Court of Appeal held that:
- an employer’s past practice of laying off employees does not necessarily result in an implied term permitting layoffs with respect to another employee, as each situation must be assessed based on its particular facts, and
- an employee’s silence does not condone a layoff; rather, an employer must show that an employee took some “positive action” consenting to the change.
In Pham v Qualified Metal Fabricators Ltd., 2023 ONCA 255, the employer laid off the employee due to financial losses caused by the COVID-19 pandemic, and extended the layoff a few times. The employee alleged constructive dismissal and pursued a claim. The motion judge found there was no genuine issue requiring a trial because the employee was found to have condoned the layoff. The motion judge granted summary judgment and dismissed the claim. The Ontario Court of Appeal overturned the motion judge’s decision that found the layoff was not a constructive dismissal. The Court of Appeal found the employee’s silence did not condone the layoff and it was a live issue that required a trial.
This decision serves as an important reminder for employers to ensure there is a strong and enforceable written employment agreement in place allowing temporary layoffs; otherwise, an employee may allege constructive dismissal in the event of a layoff, exposing the organization to substantial liability. Importantly, even a letter outlining the terms of a layoff that is signed by the employee, or their failure to object within a reasonable amount of time, do not necessarily prove condonation – an employer must show the employee engaged in a positive action condoning the layoff.
If you are an employer, feel free to reach out to us and we can prepare documents to allow you to protect yourself and minimize your liability. If you are an employee, we can help you with your constructive dismissal claim and ensure you get what you are entitled to.
