Beginning in 2020, many employers were forced to make the difficult decision to downsize or even close their doors temporarily as the COVID-19 pandemic wreaked havoc on their businesses. As a result, employee layoffs became much more common and widespread.
Given this, we thought it timely to review the legal concept of a “layoff” under provincial employment standards legislation and how it differs from a dismissal. Below, we answer the following questions:
What is a layoff?
When is a layoff valid?
When does a layoff become a termination of employment?
When will a termination of employment entitle you to severance?
What is a layoff?
Non-lawyers often use the expressions “I got laid off” and “I was fired” interchangeably. In fact, a true “layoff” has a very specific legal meaning under British Columbia’s Employment Standards Act (the ESA) and is quite different from a firing.
Under the ESA, an employee is laid off when they are given less or no work, with the intention that the employee will eventually return to a regular work schedule. In other words, layoffs are temporary. A laid-off employee is still considered to be employed and their benefits and entitlements – including vacation – are protected during the layoff.
Non-unionized employees in BC can be laid off for a maximum of 13 weeks in any given 20-week period. In response to the unprecedented financial strains employers faced last year, the provincial government allowed employers and employees to (jointly) apply for an extension of this 13-week period.
When is a layoff valid?
There are only three circumstances in which an employer may temporarily lay off an employee under the ESA. The layoff must be:
Normal and expected in the industry (e.g. in the logging industry),
Part of an employment contract, or
Agreed to between the employee and the employer.
When does a layoff become a termination?
A layoff will be considered a termination of employment if:
The employee won’t be returning to work,
The employee doesn’t agree to the layoff, or
The layoff lasts longer than the maximum number of weeks (subject to certain exceptions).
If the employer makes substantial changes to the employee's terms of employment (such as hours or pay) during the layoff period, the Employment Standards Branch may also decide that a person’s employment has ended.
If and when a layoff becomes a termination, the ESA rules relating to payment of wages, compensation for length of service, and other employee entitlements will apply.
When are you entitled to severance?
In British Columbia, an employer can end a non-unionized worker’s employment at any time so long as the reason does not violate human rights or employment-related legislation AND the employer provides the employee with adequate notice or pay in lieu of that notice (often referred to as “severance”). (If the employee was fired for “cause”, no notice or severance is due.)
Generally speaking, if your employer ends your employment without notice, severance or cause, this amounts to “wrongful dismissal”.
The minimum amount of notice or pay a dismissed employee is entitled to is set out in the ESA and is based on the length of the employee’s employment. However, under the common law, an employee may be entitled to more than the ESA minimum. The appropriate amount of notice or severance depends on various factors, including how long the employee was employed, whether there is a valid severance clause in the employee’s employment contract and, in some cases, other factors such as the employee’s age and job position and the availability of similar employment.
Takeaways
So, the key things to remember are that true “layoffs” under BC employment standards legislation are temporary, time-limited and consensual (between employer and employee). Not surprisingly, many employers have viewed them as desirable alternatives – for both themselves and their workers – to mass firings or closing up shop in an era where uncertainty reigns.
If a layoff extends beyond 13 weeks or was imposed unilaterally by the employer, this may mean your employment has been terminated, possibly entitling you to notice or severance.
If you have questions about a layoff, including whether your employment has actually been terminated, we encourage you to contact the Employment Standards Branch or an employment lawyer to discuss your options and entitlements.