Law Times

lAw times • July 27/August 3, 2009 FOCUS PAGE 11 Layoffs may come with hidden liabilities BY IAN HARVEY For Law Times by all the niceties of the On- tario Employment Standards Act and that when handing out the pink slips, no sever- ance packages are required. Well, common wisdom would be wrong in some cases, says Erin Kuzz at Sherrard Kuzz LLP, specializing in construction law. "It's true that C they're not covered by ESA in that the construction is ex- empt from payment in lieu of notice," says Kuzz. "But there is some com- mon law on this." Most clients are surprised to discov- er they could be lia- ble if the terminated worker decides to make a case. "Th e employer might think, ommon wisdom has it that the construction sector is not covered even if they've found another position elsewhere. Th e common law is quite clear on general employees, says Kuzz, pointing to Bardal v. Th e Globe and Mail Ltd. which set payment in lieu of notice at a year's salary following 17 years of service. Th e tone for construction workers was set in Scapillati v. A. Potvin Construction Ltd. in which a car- penter claimed he was due sev- erance in lieu because instead of a temporary season layoff in Dec. 1993, he was not recalled in the spring, in ef- fect a permanent termination. Th e court held that Albino Scapil- lati, the plaintiff , had a long history of such layoff s and that it formed part of a pattern of employ- Erin Kuzz ment. It also held that he'd only been working for Potvin 'Oh, they can't aff ord a lawyer,'" she says. "But a lot of lawyers will work on contingency. If they know this area of the law and the employee has been employed for 10 or 15 years or more with no issues, then they might just take it on." On the skilled trades front of the construction business, layoff s are a fact of life. Th e job fi nishes, or at least that trade's role on the site wraps up, work dries up as it has in this reces- sion, or the season nature of the industry means December to March are down periods. Most skilled workers have adapted to the on-again-off - again nature of the business, though up until the credit crash, most building sites were go- ing full throttle and the biggest challenge facing contractors was not terminating staff but fi nd- ing enough skilled staff . In tough times, however, lay- off s loom and core employees such as site superintendants and project managers may fi nd them- selves getting the axe. And that's when things change, she says. It's a tough choice for com- pany owners and senior manag- ers, says Kuzz, because losing that talent also means losing a knowledge base and the loss of valuable assets since when things do turn around those people may have moved on. Th e key, she says, is to have them leave on good terms. "Th at means you may want to think about off ering some sever- ance even though you may not think legally you have to," she says. "And then, if they accept, have them sign a release." It's not a strategy that imme- diately sits well with the hard scrabble contractor veterans who have been used to doing business their way for decades. But ensuring the laid off employee is sympathetic and compensated may mean they're more likely to come back to work when things do pick up, Croll_Key Developments (LT 1-3x4).indd 1 For a 30-day, no-risk evaluation call: 1.800.263.2037 Canada Law Book is a Division of The Cartwright Group Ltd. Prices subject to change without notice, to applicable taxes and shipping & handling. www.lawtimesnews.com 7/22/09 2:57:54 PM LT0727 Published annually, this book brings together a team of leading practitioners who provide expert insight into the latest noteworthy developments in estates and trusts law. 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In dismissing the appeal and upholding the original decision that Scapillati was not entitled to payment, the court also set the bar high for any construction worker seeking compensation as the re- sult of a termination, temporary or otherwise, says Kuzz, but im- portantly did not slam the door on the concept of severance. But, she says, those work- ers with no or little history of cyclical layoff s and with a long employment history could be entitled to severance. "It's very hard however to say how much," she says. "As always it depends on the age, the length of service, their skills, and the likelihood of future employ- ment and how long it would take to fi nd a similar position with similar compensation." Sweetening the severance papers with a modest off er of severance is a proactive stance that could pay off later, she says, but not all clients are happy about it. "I also recommend to them that they have a standard employ- ment contract that recognizes the ESA," says Kuzz. 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• Cover
• LSUC Honours
• The Associate
• Focus On Construction Law