Temporary Layoffs During Covid-19

While many businesses in B.C. that temporarily shut down or reduced operations due to Covid-19 are now in the process of returning to normal, not all employees are necessarily heading back to work. Some may still be experiencing layoffs, which has left both employees and employers wondering about their legal rights and obligations.

One common misconception – among both employees and employers – is that employees can be temporarily laid off in the first place. Employers do not have a right to lay off their employees, unless the contract allows for temporary lay-offs. Under normal circumstances, there are only three situations in which an employee can be laid off:

1. the employment contract explicitly allows for it;
2. layoffs are common in that particular industry (for example, on-site construction workers); or
3. the employee voluntarily agrees to the layoff.

Unless an employee falls under one of these specific exemptions, the employee is entitled to treat a temporary lay-off as if it were a termination, and thus claim compensation by way of severance or termination pay.

That being said, these are not normal circumstances. In the wake of Covid-19, the B.C. Employment Standards Branch (“ESB”) has updated its Employment Act Interpretation Guide to address the pandemic’s effects on businesses. It states that if a closure or staffing reduction is directly related to Covid-19 and it is not possible for the employee to work in a different manner (e.g. to work from home), then there may be an exception to the employer’s obligation to provide the employee severance or termination pay.

However, these guidelines likely do not provide the additional protections to employers that they may be assuming. First, these exceptions are not automatic and will be made on a case-by-case basis. If an employee’s layoff is only indirectly related to Covid-19, then the exception will not be granted. Secondly, and much more importantly, the Employment Standards Act does not override contractual or common law limitations on an employer’s ability to lay staff off. The ESB’s interpretation of the Employment Standards Act in regard to Covid-19-related layoffs is limited to that statute, but in almost all cases where one of the three exceptions stated above don’t apply, the employee would still be entitled to make a claim for wrongful termination, which could result in a significant award pursuant to common law principles. Ultimately, it will be up to the courts to determine whether the ESB’s policies will have any bearing on the question of whether a particular layoff should be considered a “wrongful termination.”

While an employer is not required to give written notice of a temporary layoff, it is advised to do so, particularly if the employer is hoping to be granted an exception due to Covid-19. The notice should clearly articulate any Covid-19-related reasons for the layoff.

In B.C., employees are automatically considered laid off if they earn less than half of their weekly wages at the regular rate (averaged over the previous eight weeks).

What if an Employee Consents to a Temporary Layoff?

If layoffs are not explicitly permitted by the employment contract or common industry practice, the employee may still decide to consent to a temporary layoff. Employers may find employees more agreeable to a temporary layoff during the Covid-19 pandemic due to concerns about being able to find alternative employment during these uncertain times.

If the employee does not want to alter the terms of the employment contract to allow for temporary layoffs in the future, the employee should make it clear in writing that they are only consenting to the current layoff due to the extraordinary circumstances of Covid-19 and that they are not consenting to any future layoffs.

The B.C. government has temporarily amended the Employment Standards Act to extend the maximum allowable time for a temporary layoff from 13 weeks out of a period of any 20 consecutive weeks, to 16 weeks for layoffs resulting from Covid-19. If an employee is laid off for longer than that, even if they agreed to the temporary layoff, the employee becomes entitled to treat the layoff as a termination for purposes of the Employment Standards Act. (If the contract did not allow for a layoff and the employee never agreed to it, the employee could treat the layoff as a termination immediately.)

If you are an employee or an employer requiring further information about layoffs arising from Covid-19, please contact one of our Employment Lawyers at North Shore Law for assistance.