Layoffs, Non-Competition Agreements, Claims of Constructive Dismissal, Reduced Hours, Elimination of Bonuses

Howard Levitt
National Post

Cancelling the delivery of its $50 million Dassault Falcon 7X and reducing its fleet from five to two jets were Citigroup’s responses to crushing losses. Less luxurious retrenchment has typified corporate efforts, with employee cutbacks dominating the list of survival strategies. But not all have subscribed even to that strategy. As the Massai proverb states, “Daylight follows a dark night,” and so some companies, poising themselves for the rebound, are doing what they can to preserve their workforce with modifications.

Layoffs, job-sharing, reduced hours, elimination of bonuses, unpaid vacations, retraining, subcontracting, and home and virtual offices comprise those companies’ cost-cutting arsenal. All such efforts signal changes to the employment contract and are subject to challenge.

Temporary Layoffs

In the absence of industry practice, there is no general right to temporarily layoff employees. If layoffs proffer the necessary relief, obtaining the employee’s consent will discharge the employer of liability.

Modifying the Position

As companies adapt to the economic crisis, changes will be reflected in individual positions, heightening claims of constructive dismissal.

Release Employees from Non-Competition Agreements

When Michael Davies was laid off, he treated himself as terminated. Having signed a non-competition agreement with Fraser Collection, he believed he could only look for work outside his industry. He didn’t find work and claimed the restriction effectively prevented his re-employment and thus mitigation.

Voluntary Severances

The recent elimination of mandatory retirement makes termination of older employees a violation of human rights.

Howard Levitt is counsel in the Employment & Labour Law Group in Toronto. Contact him directly at 416-307-4059 or hlevitt@langmichener.ca.

Ed.: This article, largely in this form, appeared previously in Howard’s weekly column on the first page of the Working section of the National Post.

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