Businesses need to prepare now for the end of temporary layoff period

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If your business had to lay off workers for reasons related to the COVID-19 pandemic, you may know that the end of the temporary layoff period is fast-approaching.

As a business, it is important to start considering your options and come up with a plan for the coming months.

The pandemic has had a devastating economic impact on many businesses in British Columbia. In order to assist employers and employees during the COVID-19 pandemic, the provincial government extended the maximum period for a temporary layoff under the Employment Standards Act (ESA). The maximum length of a temporary layoff is now 24 weeks, ending on or before August 30, 2020, in a period of 28 consecutive weeks, rather than the usual 13 weeks as set out in the definition of “temporary layoff” in the ESA. This extended temporary layoff period does not apply to layoffs starting on or after June 1, 2020.

After August 30, the layoffs will become “deemed terminations” under the ESA. What this means is that come August 30, employers will either have to recall or permanently terminate those employees on layoff and pay out any termination pay or severance they are entitled to under the law. After months of financial losses, these termination pay obligations will be an added financial stress for businesses still recovering from COVID-19 shutdowns and could bankrupt some businesses.

Employers should consider recalling back to work as many employees as possible before the expiry of the 24-week temporary layoff period on August 30 to avoid incurring substantial liability for termination pay. Where a business cannot recall all laid-off employees, it may be possible to reshuffle the workforce such that a reduced staff can continue to work in a rotation or under another modified schedule, thereby reducing the number of deemed terminations.

Employers who need more time to recall staff and who want to continue temporary layoffs after August 30 have to apply to the Employment Standards Branch for permission to do so. The provincial government recently implemented a new web portal to expedite applications for such variances. The government website claims that a request submitted by August 25 will receive a decision by August 30.

Unless a variance is successfully achieved, employers should prepare themselves for the reality that, after August 30, employees who remain on temporary layoff are likely to be deemed terminated.

Terminated employees have a legal right to termination pay either under the ESA or at common law. The number of employees who have been laid off, their length of service and a variety of other factors will affect the amount of termination pay that is required at law.

Section 65 of the ESA outlines some exemptions to the termination pay obligations, including where an employment contract is impossible to perform due to an unforeseen event or circumstance. It is possible that this “frustration provision” may factor into the COVID-19 narrative for some businesses where there is a closure or reduction in business directly related to COVID-19. However, given that many businesses have been able to reopen with the easing COVID-19 restrictions, there is concern that this exemption will not apply to many B.C. businesses.

Finally, businesses should also highlight for their employees that severance pay may impact the employees’ entitlement to the Canadian Emergency Response Benefit (CERB).

If you have any questions about this topic, require assistance with recalling employees or drafting a return to work policy, or any other questions relating to workplace law or COVID-19, we encourage you to seek legal advice.

This article is current to July 27. Due to the rapidly changing legal landscape with respect to COVID-19 and our government’s response to the pandemic, please understand that this article may not reflect the current applicable obligations, rights and benefits of employers and employees. •

The article is for general information purposes only and does not constitute legal advice.

Tamara Navaratnam is an employment, labour and human rights lawyer at Roper Greyell LLP.