Coronavirus (COVID-19) AND Temporary Lay-offs in Canada

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This lectures answers whether a Canadian employer can temporarily lay-off an employee due to the recent outbreak of Corona Virus. It also explains employees’ options if the lay-off is unlawful.

This lecture is taught by Amer Mushtaq, LL.B., M. Engineering , B.Sc. (Hons.), who is the Principal and Founder of Formative LLP.   Through his YouTube channel, YouCounsel, Amer shares practical advice from his years of legal experience to help anyone access justice and achieve their goals.  Subscribe today to learn more.


Show Notes:


Lecture Slides:

Welcome to YouCounsel.

Based on the inquiries that I have been receiving lately from employees and various employers, I believe there is some confusion about the right of an employer to temporarily lay off an employee. I wanted to post a lecture about this, although we had posted a lecture on this topic back in 2017—which is still available—but there is some additional information in this lecture.

As usual we begin with our disclaimer that this lecture is not legal advice. If you have any specific questions regarding your issues, you should contact a lawyer or a paralegal or the Law Society of Ontario for a referral.

In today’s lecture we will explain the difference between a layoff, which is termination and temporary layoff. We will talk about, under what circumstances can an employer temporarily layoff someone’s employment.  What to do if someone is laid off temporarily and that temporary layoff is unlawful?  What are the entitlements on a temporary layoff?  Now a lot of people when they are terminated from their employment they use this term / they say that “I have been laid off”. Technically, normal people say that; but legally speaking that is not an appropriate term. When an employment has ended completely, that is termination or dismissal or severance of employment.

But, what is important to note, is that in that case the end of employment is permanent. You’re not going back to that employer after a certain period—if their business improves or corona virus ends or whatever.  This is a final and a complete severance of ties with that employer. That is essentially termination which is different than layoff, which is a temporary layoff thing.  By temporary it means that there is a temporary interruption in your employment. You are still an employee.  Employment has not ended as under the Employment Standards Act. The temporary layoff could be up to 13 weeks in 20 consecutive weeks or in certain circumstances, it could be up to 35 weeks in 52 consecutive weeks. That is the length of the temporary layoff.  If the employer does not recall an employee within that time period, then that temporary layoff automatically becomes termination of employment and triggers termination of employment rights. A temporary layoff is slightly different than the layoff that we normally use, which is the end of employment.

Can my employer temporarily lay off my employment? The answer is yes and no.  In Scenario number one, there is a specific right, there’s a specific clause in your employment contract, that allows the employer to temporarily lay off an employee in certain circumstances or if you are a unionized employee, then it should be in your collective agreement or there has been past practice. For example, if you work in a factory and during downturns the factory lays off certain employees and it happens all the time, you have been laid off previously, then in those specific circumstances the employer does have a right to temporarily lay off employees and that would apply in today’s world where because of coronavirus, the businesses may be slow and you and your employer may not have sufficient work. But if there is no specific right in the employment contract or on the basis of past practice then the employer does not have an automatic right to temporarily lay off an employee. If an employer does that, then essentially the argument from the employee side is that, this is triggering the terminations, by sending me away even though you are saying that we are temporarily laying you off because the employer does not have that right that can potentially trigger termination rights for that employee.

Ok, so then if you are temporarily laid off and it is unlawful because the employer does not have that right, then what do you do? You essentially have 3 options.

Option number 1: is that you accept the temporary layoff and you do nothing. By doing nothing I mean that you do not dispute the employer, you do not challenge the employer’s decision and then you go and apply for your E.I. or Canada Emergency Relief Benefits and what not. But the problem with that is, in that case what you’re risking is the change of term in your employment agreement—essentially by accepting that temporary layoff. If there is another scenario, different scenario, not necessarily a pandemic situation, but an employer’s business maybe slow for some other reason, then the employer now potentially has a right to temporarily lay you off again because now by accepting a temporary layoff, it does become a past practice and then the employee can use that in a different scenario.

Option number 2: is you dispute or you challenge the employer. You say, that you do not have the right to temporarily lay me off based on my employment contract. Then what do you do? Essentially what you’re saying is that by temporarily laying me off you are terminating my employment.  Therefore, give me my termination rights—whether it’s termination pay, severance pay and / or reasonable notice. These are 3 different scenarios in combination or separate that you may be entitled to.  Therefore, you know you need to give me that money. Now the difficulty with that, is that, if the employer disputes that or if the employer is not willing to make your payment for the severance because either the employer does not have sufficient money because of the economic situation, then you are in a potential legal fight.  And if you know anything about courts—these days the courts are working on a reduced scale because of the environment / because of the circumstances of coronavirus.  Courts are dealing with emergency matters.  It may take a long time for you to resolve your dispute—a legal dispute with your employer.  Now, aside from worrying about your health issues and other circumstances, you are stressed out about a potential legal fight with an employer. There could be a 3rd option.

Option number 3: Not a lot of people have talked about it. I believe that this is possible—which is that you agree on a one time basis with your employer. This is a “Without Prejudice” basis.  Essentially the agreement is between the 2 parties—employer and the employee in writing and is on a Without Prejudice basis—that considering the circumstances, the health environment, the outbreak of Corona virus we both are agreeing that there is no change in the employment terms. This is one time exception because of the dire circumstances of the situation.  The employment rights are not changing and therefore you are preserving your rights.  You are saying that, “you the employer do not have any future right whether it’s because of a pandemic or another issue but my employment contract is not changing. I’m retaining the right. I’m just making this one time exception.  I believe that if there is a written agreement between employer and employee that agreement will be honored by the court.

Let’s talk about entitlements. Essentially you have 2 kinds of entitlements; one is to apply for Canada Emergency Response Benefits and I have a separate lecture on that.  You get $2000.00 per month up to 16 weeks.  That lecture was posted yesterday. By all means check that out.  These are the benefits that you may get with respect to the temporary layoff or permanent end of employment, and/or you apply for the employment insurance benefits which are regular benefits.  Again, your temporary layoff is up to 13 weeks in 20 consecutive weeks or 35 weeks in 52 consecutive weeks.  During this time you will get your employment insurance regular benefits. But, remember, that if at the end of 13 weeks or by 13 weeks the employer does not recall you, then essentially that temporary layoff turns into termination.  In some circumstances, there are specific conditions in the Employment Standards Act where the temporary layoff could be up to 35 weeks.  For those employees if the employer does not recall them within 35 weeks, then that temporary layoff turns into termination of employment. But with respect to applying for benefits, I’ve posted two separate lectures. By all means check those out.

I hope that this clarifies the rights and obligations with respect to temporary layoff and what are some of the things that employees can do to preserve their rights.  Or, if the employer does have the right, how do you proceed with respect to obtaining your benefits. Now one final point that I wanted to add was that in certain circumstances even though the employer may not have a right to terminate, the government can enact a statute or enforce a statute such as the Emergencies Act, which basically orders the employers to shut down their business. Now that decision is really not made by the employer.  It essentially is flowing from the application of a specific legislation and in that case then even if there is no right in this specific contract, the employer by virtue of that statute may still be able to temporarily lay you off. Hopefully this clarifies the issue.

You’re welcome to post your questions and I’ll try to answer as soon as possible.

Thank you for watching.

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