Extensions to Maximum Length for Temporary Layoff: What Federally Regulated and British Columbia Employers Need to Know to Avoid Deemed Terminations

Employment standards legislation across Canada allows employers to temporarily layoff employees for a limited period of time in certain circumstances. This temporary layoff should not be conflated with termination. Temporary layoff does not immediately sever the employment relationship so long as the employer meets the applicable legislative requirements, including recalling the employee before the maximum allowable time period.  If the employer does not recall the employee before the maximum time period elapses then the employment relationship is deemed terminated.

In the past four months, following the outbreak of COVID-19, various provincial governments as well as the federal government have amended their employment standards legislation by extending the maximum allowable time period for temporary layoff.   On June 23^rd and 24^th , the federal and British Columbia governments, respectively, announced further extensions. The Federal Minister of Labour announced an extension of time for federally regulated employers to recall temporarily laid off employees by up to six months. The British Columbia government quickly followed in the federal government’s footsteps by extending the maximum allowable length for temporary layoffs  to 24 weeks.

Federally regulated employers, prior to the amendment on June 23, 2020 and pursuant to the Canada Labour Standards Regulations, were permitted to temporarily layoff their employees for up to 3 months with no notice of a recall date; or, for a period not exceeding 6 months with notice of an expected date or period within which the employee would be recalled.   The three month period is now extended by six months for employees laid off prior to March 31, 2020; and up to December 31, 2020 for employees temporarily laid off between March 31 and September 30, 2020. With respect to those provided notice, the maximum temporary layoff period is extended as follows:

• For employees temporarily laid off prior to March 31, 2020 it is extended by six months, for a total of 12 months, or until December 31, 2020, whichever occurs first;
• For employees temporarily laid off after March 31, 2020 and up to September 30, 2020 it is extended up to December 30, 2020 where the notice provided by the employer specifies a fix date or period of return prior to December 30, 2020;
• If the fixed date or fixed period specified in the notice will be on or conclude on or after December 30, 2020, employers will have until that date to recall their employees.

These amendments do not apply to employees who are part of a collective agreement that specifies recall rights.

It is imperative for employers to understand that, depending on the jurisdiction in which they operate, they may or may not have the right to temporarily layoff employees. For example, in British Columbia, despite being addressed in the Employment Standards Act, employers do not have the right to temporarily layoff employees. Employers cannot temporarily layoff an employee unless: there is a right to do so stated specifically in their employment agreement;  the employee agrees to be laid off or it is implied by industry practice. Federally regulated employers, however, are able to temporarily layoff employees pursuant to the Canada Labour Code and Canada Labour Standards Regulations as well as collective agreements.

While the stated objective of these federal and provincial amendments is to help protect jobs of private-sector employees and support employers facing economic hardship arising from COVID-19, such amendments can give rise to greater uncertainty for employers and employees as to their rights and responsibilities. Employers are encouraged to regularly review all relevant contracts and employment standards legislation prior to temporarily laying off any employee. If the employer does not have the statutory or contractual right to temporarily layoff an employee, they may choose to approach that employee to obtain and document their consent to be temporarily laid off. Once an employee is temporarily laid off, employers must keep a close watch on the time period for recall. Failure to do so may result in unwanted cost consequences arising from deemed terminations without cause or claims of constructive dismissal.

The information contained in this article is current to June 29, 2020, but is subject to change. Please contact David Edinger and Talya Nemetz-Sinchein for up to date information.

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