If an employer is experiencing financial difficulties, it may be necessary to lay off one or more employees on a temporary basis until circumstances improve.  Temporary layoffs allow employers to reduce labour costs in the short-term without triggering severance obligations payable on the termination of employees.  However, the Courts and Employment Standards Branch in BC have made it clear that an employer in BC does not have the right to lay off an employee on a temporary basis unless:

(1)    the employee consents to being temporarily laid off;
(2)    the employer is impliedly permitted to temporarily lay off employees; or
(3)    the employer is expressly permitted to lay off the employee.

The onus is on the employer claiming that temporary layoffs are permitted to prove that the employment relationship provides for temporary layoffs by consent, impliedly or expressly.  In some industries, an employer’s right to temporarily lay off employees may be implied by well-known industry-wide practice (Ex. logging).  However, the best practice is for employers to include a term in each employment agreement that expressly states that they have the right to temporarily lay off employees.

So, what constitutes a “temporary layoff”?  According to section 1 of the Employment Standards Act of British Columbia (the “ESA”), a “temporary layoff” is:

(a)    in the case of an employee who has a right of recall (ie. the right of an employee under a collective agreement to be recalled to employment within a specified period after being laid off), a layoff that exceeds the specified period within which the employee is entitled to be recalled to employment, and
(b)   in any other case, a layoff of up to 13 weeks in any period of 20 consecutive weeks.

Again, it is important to keep in mind that this is merely a definition, and therefore it does not grant employers the right to temporarily lay off employees.  This definition is important, however, because it sets out the maximum amount of time during which an employee can be “temporarily laid off” by an employer who is permitted to temporarily lay off employees (see above).  For the purposes of subsection (a) above, the right of recall is the period of time set out in the employee’s collective bargaining agreement.  For the purposes of subsection (b) above, a “week of layoff” is a week in which an employee earns less than 50 percent of his or her weekly wages at the regular rate, averaged over the previous eight weeks.

After the applicable time period has expired, an employee who has been temporarily laid off is deemed to have been terminated, and the employer’s severance obligation is triggered (and backdated to the date of the temporary layoff).

It is important for employers to have as many tools available to them as possible to navigate unforeseen events and circumstances.  For that reason, it is important for employers to not only have written employment agreements in place, but also to include a provision that expressly permits them to temporarily lay off employees if circumstances require.

Author: Danielle (Dani) Brito

This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of business law at the following:

Una Gabie: una@touchstonelawgroup.com

Jennette Vopicka: jennette@touchstonelawgroup.com

Danielle (Dani) Brito: danielle@touchstonelawgroup.com