Many employers and employees in British Columbia are surprised to learn that a “temporary layoff” is not always legally permitted. In some cases, what an employer describes as a temporary layoff may actually amount to a termination of employment, potentially triggering termination notice, severance obligations, or even a wrongful dismissal claim.
Understanding when a temporary layoff is lawful, how long it can last, and what rights and obligations apply is essential for both employers and workers.
What is a temporary layoff in British Columbia?
Under British Columbia’s Employment Standards Act (“ESA”), a temporary layoff occurs when an employee earns less than 50% of their regular weekly wages, with the expectation that they will return to work.
When is a temporary layoff permitted?
Importantly, the ESA does not automatically give employers the right to temporarily lay off employees.
In non-unionized workplaces, an employer can generally impose a temporary layoff only if:
- the employment contract expressly permits layoffs;
- the employee agrees to the layoff; or
- layoffs are an implied term of employment because of a well-established industry practice.
British Columbia courts and tribunals have repeatedly confirmed that the ESA does not create a standalone right to impose temporary layoffs. If an employer lays off an employee without the right to do so, the layoff itself may amount to constructive dismissal or wrongful dismissal – even if the employer intended the layoff to be temporary.
In unionized workplaces, the applicable collective agreement will typically govern layoff rights, recall periods, and the necessary procedures.
How long can a temporary layoff last?
In a non-unionized setting, the ESA permits a temporary layoff for up to 13 weeks within a 20-week period. If the employee is not recalled to work within that timeframe, the employment is deemed terminated retroactively to the first day of the layoff.
In unionized workplaces, the applicable collective agreement may provide a different recall period. If the employee is not recalled within that period, the layoff may become a termination of employment.
Employers are responsible for ensuring employees are properly recalled within the allowable timeframe. Recall notices should be communicated clearly, in writing where possible, with reasonable notice of the expected return-to-work date, as employees are generally not required to follow up with their employer for this information.
When does a temporary layoff become a termination?
A temporary layoff may become a termination in several circumstances:
- The employer had no right to lay off the employee
If the employment contract does not allow temporary layoffs and the employee did not consent, the layoff may immediately amount to constructive dismissal or wrongful dismissal.
- The layoff exceeds the time limit
Even where a temporary layoff is validly imposed, a non-unionized employee who remains laid off for more than 13 weeks in a 20-week period is deemed terminated under the ESA.
In a unionized setting, a temporary layoff may become a termination if it exceeds the recall period set out in the collective agreement.
- The employee is not recalled properly
Employers must clearly communicate recall notices. Tribunal decisions have found that vague or insufficient recall efforts may not satisfy an employer’s obligations.
What is an employee entitled to if a temporary layoff becomes a termination?
If a temporary layoff becomes a termination, the employee may be entitled to:
- statutory termination pay under the ESA;
- contractual severance pay; and/or
- common law reasonable notice damages for wrongful dismissal.
Depending on the employee’s age, position, length of service, and availability of comparable employment, common law severance can significantly exceed ESA minimum requirements.
Importantly, an employer’s obligation to provide compensation for termination arises once the layoff exceeds the ESA limit, even if the employer later attempts to recall the employee.
What should employees consider?
Employees who are temporarily laid off should not assume the layoff is automatically lawful. Where possible, employees should seek prompt legal advice to understand their rights and obligations.
If the employer did not have the right to impose a temporary layoff, employees may need to act quickly to communicate that they do not accept the layoff in order to preserve potential legal claims.
Where a temporary layoff is validly imposed, employees should also be cautious about conduct that could be interpreted as a resignation. In some circumstances, accepting alternate employment or stating an intention not to return to work following the temporary layoff may be treated as resignation from employment.
What should employers consider?
Employers should be aware that the ESA does not create a right to temporarily lay off employees. Before implementing a temporary layoff, it is important to carefully review employment agreements, workplace policies, and industry practices to determine whether layoffs are legally permitted.
Where appropriate, employers should include clear temporary layoff provisions in employment agreements. It is also important to ensure layoffs remain within the applicable time limits and that recall notices are properly documented and communicated.
Improperly implemented layoffs can expose employers to claims for constructive dismissal, wrongful dismissal, unpaid severance, and additional damages. Legal advice is often recommended before imposing layoffs, particularly in non-unionized workplaces where contractual layoff rights tend to be absent.
Key takeaways
Temporary layoffs in British Columbia are more legally complicated than many employers and employees realize. In some circumstances, a temporary layoff may amount to a termination of employment from the outset or become one over time.
Understanding the distinction between a valid temporary layoff and a termination can help both employees and employers protect their rights and avoid unnecessary legal risk.
If you have questions about temporary layoffs, Ascent Employment Law can help. Contact Emma Jerrott or another member of the Ascent Employment Law team for advice tailored to your situation.
