In Ontario, it’s pretty well established that unless there’s a contract which says the employer can lay the employee off temporarily should the need arise, then a layoff is effectively dismissal without cause. This would mean that the employer would have to give notice, or pay in lieu of notice.
Of course, the double-whammy of a business shutdown and having to pay out your employees isn’t particularly appealing. Plus, odds are, if your business survives the shutdown (fingers crossed), then you’ll want those employees back, so you probably don’t want to terminate them anyway.
On the flip side, the employee could probably use all the money they can get, particularly if the lockdown drags on. Odds are the employee doesn’t want to see the business go under either, and would like to be able to return to work afterwards as well. I can’t imagine the job hunt market will be particularly fun after the dust settles.
Also, it’s not clear if or when it will happen, but I suspect that government will pass a law addressing how COVID19-shutdown-related layoffs will be addressed. Who knows when, or what that might look like – so there’s an incentive to strike a deal on your own terms, rather than having one imposed on you.
Bottom line is, most employers will have to get their employees’ consent to be laid off. Might as well do it in a way that addresses both the company and the employees’ interests.
I propose a fairly simple solution – the employer and employee(s) negotiate a temporary layoff contract, along the following lines:
- Employee takes all of their accrued vacation, and is continued to be paid (maybe less than all, depending on the employer’s ability to pay)
- Employer and employee agree to a temporary layoff (maximum 13 weeks in a 20 week period)
- Employee is paid as much notice as the employer can reasonably afford (maybe the minimum notice under the Employment Standards Act, maybe more) on the following conditions:
- If the business doesn’t survive the lockdown, or if the employee isn’t hired back after the lockdown, then it’s agreed to be a termination without cause and the amount paid now is credited towards whatever notice is owed to the employee
- If the employee is hired back after the lockdown, then the notice paid is a debt owed by the employee, which is “paid back” over an agreed period of time (deducted from paycheques over the following ____ months)
- Employee’s record of employment notes them as having been temporarily laid off, and eligible for Employment Insurance after the “notice” is paid
- Employer and employee agree that this contract opts out of whatever COVID19-specific layoff rules are imposed by government later.
This is, of course, only as good as your ability to pay, and will affect your capacity to pay other expenses (landlord). Such payments may or may not be covered under your business interruption insurance.