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Can a company shut down for Christmas break and not pay employees?

Expert: Jane Southren

Brenda asked:

We are a small aviation company who is experiencing a little bit of a slow economic cut back. This year we will be shutting down for the Christmas break for an extended week. The company is making this a shutdown and informing the employees that it will be unpaid.

We have salary and hourly employees, the hourly employees will not be paid for not working but how does it work for the salaried employees? Are they not guaranteed pay regardless or does this situation include them as well for no pay for the period of shutdown?

Jane Southren answered:

A company cannot shut down for any period and refuse to pay employees their salary unless they have reserved the right to do so in their employment agreement or collective agreement.

Under common law to force an employee to not come to work and not to pay them, regardless of the period over which this occurred, would constitute a constructive dismissal and the employer should expect to be sued for an appropriate reasonable notice payment. By this I don't mean only the statutory notice and severance amounts under the employment statutes, but also the amounts owing at common law, which are significantly more, unless the employment contract has also reserved the right to provide an amount of notice that is less than what would be owing at common law.

About the author

Jane practises as a civil litigator, with a focus in the areas of employment law, breach of contract, professional negligence and dispute resolution strategies. Having completed both her LLB and JD degrees from the law schools of the University of Windsor and the University of Detroit (Mercy) in 1995, Jane was called to the Ontario Bar in 1997, invited into the partnership of McDonald & Hayden LLP in Toronto in 2001.

In 2005 she joined Lerners LLP where she is now a partner in its commercial litigation group. Jane has appeared as counsel before the Superior Court of Justice, the Ontario Court of Appeal and a number of administrative tribunals. She is a member of The Advocates' Society and has participated in numerous legal and professional education programs, including acting as an instructor in the Ontario Bar Admission Course. During the course of her career, Jane has authored numerous articles in her areas of practice, including a regular column in the Advocates’ Brief, in which she offers practical advice and guidance to newer lawyers on subjects relating to their areas of practice.

Jane can be contacted by telephone at 416-601-4128 or via e-mail at

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