Recession Coming? Protect Yourself With 7 Tips from an Employment Lawyer

As interest rates continue to rise, many experts and employment lawyers are predicting that a recession is imminent – or already upon us.

Recessions, unfortunately, mean employment terminations - and terminations often become legal disputes that involve an employment law or employment law firm. Many employees wonder what to expect in these times of economic uncertainty. This article is a brief primer on your employment rights, how to prepare and what to expect if you are concerned that your job may be eliminated amidst cutbacks.

EMPLOYMENT LAWYERS TIP #1: Beware the “updated” employment contract

Contrary to popular belief, an employee without a written employment contract is usually in a better position than one with a written employment contract. If your employer has you sign a contract, it is almost always intended to protect the company, rather than provide you with a benefit. This is standard knowledge in Canadian employment law.

One of the most common and significant employment contract terms is one seeking to limit the amount of money you are entitled to upon termination by the company (also known as severance pay). These limitations can be extremely restrictive - our Toronto employment lawyers have seen entitlements reduced by tens or even hundreds of thousands of dollars.

Employers will often seek to roll out new employment agreements right before cutting back on their workforce. Employment agreements can be misleading - employers and employment lawyers know it. You may be led to believe that the agreement you sign is “standard” and “boilerplate”. You may be offered a small raise or a signing bonus. You may feel that your employer is just being nice to you – but a Toronto employment lawyer will tell you this is usually not the case. Do not let yourself become a victim of cost-cutting planning by signing an “updated” employment agreement without legal advice from our Toronto employment lawyers.

EMPLOYMENT LAWYERS TIP #2: Economic decline is a valid reason - but not an excuse - for termination

A common misconception among employees that employment lawyers often hear is that economic decline somehow justifies your employer’s decision to lay you off. In fact, if you are fired for economic reasons, you have the same entitlements or severance pay as employees laid off for any other reason – usually, anywhere between 2 and 24 months of notice (or pay in lieu of notice), depending on factors like your age, length of service, character, of employment, chances of re-employment to a similar role, and others. Every case is unique. A Toronto employment lawyer at Share Lawyers can help you understand what a court might award you in terms of severance pay.

EMPLOYMENT LAWYERS TIP #3: Employers don't save money by temporarily laying off employees

Another common misconception that employment lawyers often hear is that your employer saves money by handing out temporary layoffs. This misconception became more widespread during the COVID 19 pandemic when huge masses of people were laid off for up to two and a half years without compensation or severance pay. Employment lawyers took notice.

Generally speaking, temporary layoffs are not permissible. The pandemic was a special case that the government made allowances for, otherwise this would not have been permissible. Under normal circumstances, however, the law is clear - temporary layoffs are not allowed unless you, the employee, have expressly or impliedly consented to the layoff. An employment lawyer well-versed in employment law can help you understand your options if your employer tries to put you on a temporary layoff without your agreement.

EMPLOYMENT LAWYERS TIP #4: Legally, your reliability, performance, and loyalty will not help you

The general rule in employment law is that employers may terminate any employee for almost any reason – even loyal, reliable, high-performing employees. This is one thing most people don't know about employment law.

Most employees feel that their accomplishments during employment should factor into the compensation at the end of employment. However, this is almost never the case. Employment law claims may be the single most common type of civil claim, and courts have designed employment law in a way that is meant to be straightforward and predictable for all involved, including employers and employment lawyers. That means that what went on during your employment, and the circumstances that led to your termination, are generally not of interest to the employment lawyer or employment law court when assessing your damages.

EMPLOYMENT LAWYERS TIP #5: Employers may attempt to disguise unlawful terminations

On the other hand, employment lawyers know that certain circumstances around your termination can lead to increased compensation. More specifically, employers are prohibited from firing employees for reasons related to things like age, disability, gender, ethnicity, and other grounds that are specifically prohibited by statute. Employers can also be financially punished by courts for dishonest and malicious behaviour around termination – the two often go hand-in-hand.

Unfortunately, many employers look at an economic downturn as an opportunity to rid themselves of employees who are in need of troublesome accommodation, such as pregnant employees, those with a disability, or older employees. This is a time that employment lawyers take note of. However, if your employer’s decision to select you for termination and not someone else was at all influenced by these or other protected grounds, the entire termination is “tainted”, and you could be entitled to significant compensation or even reinstatement – that is, if you use employment law and an employment lawyer to prove it. Talk to an employment law firm if you think your employment contracts termination was influenced by unlawful grounds.

EMPLOYMENT LAWYERS TIP #6: A poor economy could enhance your entitlements

A poor economy can actually enhance your entitlements on an employment contracts termination. This is because one of the purposes of wrongful dismissal damages is to serve as an income bridge to new employment. If you can show a labour employment law court that the hiring market in your particular industry is unfavourable, it logically follows that it will take you longer to replace the job you lost. In one recent case at the Ontario Court of Appeal, an employee in his 40s was awarded 10 months pay in lieu of notice despite having less than 3 years service at the time of his termination.

EMPLOYMENT LAWYERS TIP #7: Your employer’s bankruptcy impacts your entitlements

Your employer’s bankruptcy, is, unfortunately, bad news for a wrongful dismissal claim. First, bankruptcy creates an immediate “stay” of any new or pending employment law cases against your employer, meaning the case can no longer proceed. Second, even if a court has ordered your employer or former employer to pay you wrongful dismissal damages, that money becomes what is known as an “unsecured debt”, meaning the debt owed (for instance) a mortgage will have priority over your debt, and if you receive any money at all it will generally be for cents on the dollar.

On the plus side, wages earned and owing can be recovered from even a bankrupt employer by our Toronto employment lawyers, and failing that, the directors of the corporation can be held personally responsible for those unpaid wages. If your employer is going or has gone bankrupt and you have questions about your entitlements, speak to a labour employment lawyer for professional legal advice as soon as possible.

If you are having an employment rights issue such as wrongful dismissal, unfair severance, or workplace harassment, but you’re not ready to talk to our law firm yet, please see the
Employment Law page on our website, created by the experienced employment lawyers at our law firm.

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