How to handle a temporary layoff

Montreal-based IT services firm CGI Group Inc. laid off about 130 workers last month in the company’s Ottawa, Montreal and Toronto offices, with most ongoing employees receiving a 35-week temporary layoff notice.

Lorne Gorber, vice-president of global communications and investor relations at CGI, said that cuts are not a result of the struggling economy, but rather shifting work and skill requirements.

“The truth is that as an outsourcer in the outsourcing business, you’re in a constant restructuring mode,” he said. “New skill sets are required depending on the client.”

“More work is being done remotely and less people are required to be in the data centre.”

The company added that even as it continues to do well and grow during the recession, it needs to continue to change with the needs of its clients.

To meet these changing demands, the CGI spokesperson noted that the company has added about 300 job openings in Ontario and Quebec amidst the cuts.

“For the affected people, had they been able to fit into any of those roles, had they been willing, or had their skill sets been matched, there wouldn’t have been an impact,” he said.

“Having a temporary layoff allows some flexibility in trying to get these employees back to work, if the work comes in. It also allows them to collect benefits while they’re not working.”

Gorber added that CGI has seen dramatic growth in the financial services sector throughout the downturn.

CGI said that it has approximately 16,000 employees across Canada.

Jennifer Perrier-Knox, senior research analyst specializing in IT human resources at Info-Tech Research Group, said that organizations today are often trying to be smart and preemptive with their layoffs. Laying people off temporarily and then bringing some back on a contract basis can save the company money and help them ride out economic difficulties.

“Another strategy could be that a company might not to give the impression they are in trouble, and they’re sending the message – especially if they’re a publicly traded company – that these are only temporary layoffs and that they are being fiscally responsible to their shareholders,” she added. “It’s all about keeping shareholders confident.”

During CGI’s round of layoffs, the 100 employees that were cut from the firm’s Montreal and Toronto offices were given temporary layoffs.

In Ontario, there are provisions in the Employment Standards Act that will allow the employer to temporarily lay off employees without triggering a “termination of employment.” There are two types of temporary layoffs: a short one of up to 13 weeks, where employers do not have to continue paying benefits or make pension contributions; and a longer, 35-week layoff, where these incentives must continue to be paid.

Similar legislation applies across Canada.

“Historically, these statutory provisions were intended to apply to certain types of seasonal workers, who were laid off periodically and who expected to be laid off periodically,” D. Bruce Sevigny, a lawyer and founder at Ottawa-based employment law firm Sevigny Westdal LLP, said.

“In recent years, some Ontario employers in non-seasonal work environments have attempted to use these statutory provisions to temporarily lay off employees, in circumstances where the employees never anticipated that they might be subjected to such temporary layoffs.”

For the average IT workers, being laid off while a company is continuing to hire or doing well financially can be disheartening. But for some, being in limbo for a 35-week period can be even worse.

“Often this strategy is adopted by employers as a way of deferring the financial obligations associated with immediate termination of one or more employees, and in some instances there is a belief that some of the affected employees might be forced, as a result of practical financial considerations, to find other work,” Sevigny said.

If such employees ultimately resign their employment to accept another position during the temporary layoff, the first company can escape its severance obligations, he added.

The employer will only face a problem if a temporarily laid-off worker elects to challenge the decision under common law. For an employee who has never expressly agreed that he or she could be subjected to a temporary layoff, legal experts agree that the move could constitute a fundamental change in the employee’s working conditions and could trigger a successful claim of constructive dismissal.

“That means the employee can treat himself as having been fired, in which case he would be entitled to severance,” Daniel A. Lublin, a Toronto employment lawyer representing clients throughout Ontario, said.

The difficulty that some employees will face is the issue of a potential recall date when the temporary layoff ends.

“In the notice of a temporary layoff, they will most likely give you a recall date. If they don’t, you have a strong case to see a lawyer,” Lublin said.

“So if CGI lays you off and says, ‘We need you back in 13 weeks,’ and the employee says, ‘Forget it,’ and decides to sue anyway, the company could call you back after 13 weeks and the judge will only limit your damages to that period of time.”

Accusing your employer of acting in bad faith or discriminating will also be difficult to prove during a large scale layoff, he added.

Lublin said that in any event, seeking out legal advice is probably the right move, regardless of a recall date. Laid-off workers should also get legal advice before signing any termination contracts or going to the Ontario Ministry of Labour.

“Understand that human resources are not your friend,” he said. “Human resources work for the company and they are not there to help you.”

And while every case is different, it will ultimately be the employee’s decision to weigh whether or not there is a bright future with the employer in question or if it makes more sense to try and negotiate a better severance package.

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Jim Love, Chief Content Officer, IT World Canada

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