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What You Need to Know about Layoffs

Posted:  Mar 27, 2020
An Angus Reid Institute survey released on March 26, 2020 confirmed what many of us are feeling around financial and job security: nearly half of Canadians say that they or someone in their household have lost hours due to the economic downturn, while 66% of survey respondents say they received no compensation for the lost hours of work. 

Though we are witnessing the power of ingenuity as workplaces make unprecedented shifts to how we work and function, there will inevitably be some losses.

Should you find yourself at the crosshairs of loss, whether it be as an employee facing a potential layoff or an employer facing financial uncertainty, knowing what your legal options and rights are will help you in making informed decisions during this time of uncertainty. 

What is a “temporary layoff”? 

While a temporary layoff may seem like a termination, it has a different legal outcome for employers and employees. 

“Temporary layoffs” are when an employee is given less work or no work but carry the expectation that the employee will return back to their regular work load within a certain period of time. 

“Terminations” are a permanent end to the employment relationship. 

If an employer intends the layoff to be permanent, and not temporary, they must give written notice and/or pay compensation to employees. When and how written notice is to be given is a complex subject matter that should be discussed with a lawyer.  

When is a Temporary Layoff considered a Termination? 

Temporary layoffs can turn into termination if an employee is not called back to work within the specified time frame. Under BC’s Employment Standards Act, a temporary layoff can last up to 13 weeks in any period of 20 consecutive weeks and can include either time not worked by the employee or time where the employee is earning 50% or less of their weekly earnings at their regular rate. 

If an employee’s layoff exceeds that time, they are considered terminated in law and entitled to notice or pay in lieu of notice and/or severance. The first day of the temporary layoff is considered the date of termination.

Guidelines for Employees who may be Laid Off 

If you think you are going to be laid off, you will want to review your employment agreement if you have one. You want to be checking for a clause in your agreement providing for temporary layoffs. If there is, your options for recourse may be limited to what is set out in the agreement and what is provided for under the law. You should have an employment lawyer review your agreement to advise you on your options.  

If there is not a layoff clause, or you do not have an employment agreement, you may be able to treat the layoff as constructive dismissal. Put another way, if your employer unilaterally changes a fundamental aspect of your employment, ie. laying you off, they have effectively taken an action that would invariably force someone to quit. You could then be entitled to sue your employer for wrongful dismissal and pursue them for severance pay through the courts, which are generally more generous with their awards of severance pay than the Employment Standards Act

You should first talk to your employer about the permanency of the situation. While no one knows how long the emergency measures will be in place for, your employer may be able to work out a plan with you. They may present you with several options to choose from, such as an early retirement package or a voluntary layoff (where you agree and waive your rights to dismissal claims) that may be tied to a lump-sum payment or other benefits. 

As is always recommended, you should not accept any layoff package without first consulting with our employment lawyer.  

If you were laid off and believe you are owed compensation, you should speak with our employment lawyer.  

Guidelines for Employers considering Layoffs

Before notifying employees of layoffs, you should first review any existing employment agreements with the employees you intend on laying off. You want to ensure that you have a layoff clause in the agreement allowing you to do this. 

If there is a layoff clause in your agreements, you can follow the procedures outlined with relatively little risk. 

If there is no layoff clause in the agreement, or no employment agreement exists at all, you have no contractual right to lay them off. An employee is entitled to treat the layoff as constructive dismissal and can pursue you for their full entitlements to severance pay under the common law. 

To minimize risk in situations where no right to layoffs exist, an employer should recall the employee back to work as soon as possible. Small to medium sized businesses should apply for Canada’s newly announced wage subsidies and keep as many staff on payroll as possible. If an employee refuses to come back, their claim against the employer will be weakened for failure to mitigate their own losses. 

Constructive and wrongful dismissals are tricky areas to navigate and you should not do it alone. If you are an employer needing to explore this option, you should consult our employment lawyer before taking any action. 

Takeaways

The laws surrounding temporary layoffs, terminations and notice periods are complex and filled with many considerations. The starting point is always the employment agreement, but it doesn’t have to end there. 

Before you take any steps, you should consult our employment lawyer to ensure your rights and legal obligations are protected and fulfilled. 
 
Disclaimer: This information is provided as legal information only, and is not to be considered legal advice. For advice related to your specific situation, call us at 250-248-8220.  

 

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