Small businesses across the country have been impacted by COVID-19, with many unable to continue paying their employees. Before employers in Alberta decide to terminate workers who they cannot afford to keep on, they should instead consider enacting temporary layoffs where possible. However, there are employer obligations surrounding temporary layoffs that business owners need to know about before proceeding.
How has temporary layoff legislation changed?
Temporary layoffs allow employers to maintain an employment relationship with an employee while temporarily reducing or stopping their work. In Alberta, temporary layoffs are governed by the Employment Standards Code (the “Code”).
Due to COVID-19, the maximum duration of a temporary layoff has been increased from 60 days to 120 days, retroactive to March 17, 2020. This change will apply as long as the public health emergency order remains. If the layoff lasts longer, it will be considered a termination and the employer will have to pay termination pay.
The government has not yet clarified how this extension of temporary layoff length interacts with the Code’s provisions regarding extending layoff length by, for example, continuing payments for the employee’s benefit to a pension or insurance plan.
How to Provide Temporary Layoff Notice
Before enacting a temporary layoff, the employer must provide their employee with notice in the amount required by the Code:
- 1 week if the employee has been employed less than 2 years
- 2 weeks if the employee has been employed more than 2 years
In exceptional circumstances an employer may be relieved of the notice obligation if unforeseeable circumstances prevent the employer from giving this notice. In this case, the employer must give as much notice as practicable. Without proper notice, the employee may consider the temporary layoff to be a constructive dismissal.
A notice of a temporary lay off must be given in writing, must state that it is a temporary layoff notice and its effective date, and must include a copy of sections 62-64 of the Code.
Temporary Layoffs and the Law
While the Code provides the minimum standards that employers must follow in order to layoff employees, if the employee’s employment agreement does not expressly provide the employer with the right to temporarily layoff the employee, the employee may treat the temporary layoff as constructive dismissal and claim damages, including termination pay, from the employer.
The only way to lay off an employee without risk is to have a temporary layoff clause in the employment contract, to get consent from your employee or if there is evidence that there is a general industry practice permitting layoffs.
However, many businesses do not have contracts that explicitly permit temporarily layoffs. Employers that have no choice but to lay their employees off should first seek their consent. If the employer is not able to obtain consent from the employee, there will be risks to laying off such employees.
Are you concerned that your employment agreements do not contemplate temporary layoffs?
We can help. Our HR experts can advise you on how to best protect your business with contracts and documentation. Speak to our advisors today to get help with managing your employees during COVID-19: 1 (833) 247-3652.