Temporary layoffs: Key considerations for employers

When does an employer have to terminate a temporarily laid off employee?

Temporary layoffs: Key considerations for employers

2020 has been a tough year for employers and HR leaders.

The onset of COVID-19 has brought a plethora of questions around employment law – in particular the right to temporary layoffs for struggling businesses.

HRD spoke to Ashley Mitchell, partner at Miller Thomson and speaker at our upcoming Employment Law Masterclass Vancouver, who revealed employer rights in BC – and explained the issues HR runs into with temporary layoffs.

“The BC Employment Standards Act only allows temporary layoffs in very limited circumstances,” explained Mitchell.

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“Effectively, the Act says that the employee must agree to a temporary layoff. Alternatively, the ability to temporarily layoff an employee has to form part of an employment agreement or must be considered normal within a particular industry in order to be permissible.  

Employers don’t have the right to simply layoff employees if the employees in question don’t agree.

“Otherwise, if an employee does not agree to the temporary layoff, it could be considered a termination of employment.

“It’s a real tricky question to manoeuvre because, for the most part, employers have never been in this position before.”

Temporary layoffs were rare in most industries pre-COVID, with Mitchell explaining that it’s not a term that you would normally see in an employment agreement.

With the ongoing COVID-19 crisis forcing many businesses to shut up shop, temporary layoffs became relatively normal. People seem to understand that it’s necessary in order to at least keep their current role and avoid termination.

“For the most part, employees were fine to be temporarily laid off,” added Mitchell.

“So long as they were assured they had a job at the end of the day – that’s assuming they had something to come back to.”

Another issue businesses need to consider is the allotted time of the layoffs.

“You can only have temporary layoffs for up to 13-weeks within a 20-week period,” added Mitchell.

“That’s the maximum. There are rules, under the Employment Standards Act, which allow an employer to apply to the Employment Standards Branch for a variance which would permit an extension of the temporary layoff period.”

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However, these are only issued under limited circumstances.  Firstly, a majority of the employees in question would need to agree to the variance.  Secondly, the employer must be able to provide some assurance that the employees would be recalled back to work by a specific date.

If an employer finds themselves unable to re-hire the laid off worker, and is denied an extension to the layoff, the employer would likely be required to terminate the worker.

“If an employee is terminated, the Employment Standards Act requires that employees be paid any outstanding amounts that they have owing, whether that be for vacation pay or any other accrued amounts,” added Mitchell.

“The employee would also be entitled to termination pay in accordance with the Employment Standards Act – as well as any severance that may be payable under a written employment contract or reasonable notice at common law.”

“If an employer needs to extend temporary layoff periods for its employees, the best option to avoid having to terminate employees would be to try and get the extension through a variance – but the tricky part is having some sort of idea of when you can bring the employee back.”

To hear more from Ms. Mitchell and other employment lawyers, sign up to our upcoming Employment Law Masterclass Vancouver here.

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