* This article has been updated to include new changes as of June 25, 2020.
Temporary layoffs allow employers to reduce or stop employees’ working hours for a fixed period while still continuing the employment relationship. A temporary layoff means that eventually the employee will be able to resume working their normal hours.
In British Columbia, many employers are temporarily laying off workers because they are unable to continue paying them due to COVID-19. However, employers must be careful as they do not have an automatic right to lay off employees and may be liable to employees for damages if they enact layoffs without any right to do so. Here’s what business owners need to know about temporary layoffs in B.C. and how they can protect their business.
How do temporary layoffs work?
A worker is considered to be laid off when their earnings have been reduced to less than 50% of their regular weekly wages averaged over the previous 8 weeks.
Only layoffs that are temporary are permitted under the Employment Standards Act. A temporary layoff may not exceed 13 weeks in a 20-week period. Due to the COVID-19 pandemic, this has been extended to a maximum of 24 weeks (expiring on August 30, 2020). The employee’s consent is essential for extending the layoff.
During the temporary layoff, the employment relationship is not severed – the employee remains continues to accrue statutory and contractual entitlements. If an employee does not resume working their regular hours within the maximum permissible temporary layoff period, their employment is deemed to be terminated, and the employer becomes liable to pay termination pay and potentially other damages to the employee.
When is a temporary lay off allowed?
Temporary layoffs in accordance with the Employment Standards Act are allowed only if:
- Temporary layoffs are common practice in the employer’s industry
- A temporary layoff clause is part of the employment contract
- The employee has agreed to a temporary layoff
Temporary layoff or Termination?
If the temporary layoff does not satisfy one of the conditions above, the employee may elect to treat the layoff as a constructive dismissal and claim damages from the employee, including statutory and contractual termination pay.
If the employee’s employment is terminated, either due to the employee claiming constructive dismissal or because the layoff exceeds 13 weeks in a 20-week period, final wages must be paid to the employee either:
- Within 48 hours of their last day of employment if the employer ends employment; or
- Within six days of the employee’s last day of work if they quit
Final wages include regular wages, overtime, statutory holiday pay, compensation for length of service and vacation pay.
Have questions about laying employees off correctly?
Employers do not automatically have the right to temporarily lay off employees. An incorrect temporary layoff may be constituted as a constructive dismissal and may lead to legal claims against your business. Protect your business with expert human resources advice from our advisors: 1 (833) 247-3652.