March 17, 2020
The COVID-19 pandemic raised significant and unforeseen hurdles for private businesses around the world, some of which continue today. Businesses that have operated gainfully for decades had to consider the prospect of taking extreme steps – including broad layoffs – or the prospect that a failure to take steps will close their doors forever.
LAYOFFS GENERALLY
An employee who is laid off cannot claim termination pay under the act until the layoff exceeds 13 weeks in a 20-week period or — where a collective agreement is in place and includes recall provisions — until the layoff exceeds the period of recall under a collective agreement. The termination date, should the layoff reach this point, is deemed to be the date upon which the employee commenced the layoff.
It is important to note that a layoff due to lack of work does not amount to termination for just cause.
It is also important to note that a layoff can be considered termination of employment if done without the proper contractual authority or for a period that exceeds the applicable maximum duration. BC’s Employment Standards Branch has a bulletin on this topic HERE.
LAYOFFS AND COVID-19
On March 17, 2020, the British Columbia government declared a state of emergency. This announcement, in addition to the various public health recommendations, government mandated restrictions on events and gatherings, the need for social distancing, and the impact of COVID-19 generally, made it very difficult for many businesses to continue to operate, provide work and/or pay employees.
The problem is that employers do not want to terminate their employees but might end up inadvertently doing so if they run afoul of the strict requirements for layoffs in the Employment Standards Act and end up liable for pay in lieu of notice and/or other damages.
In May 2020, changes to the Act provided that temporary layoffs relating to the COVID-19 pandemic could be extended to 16 weeks in any 20 week period. A further amendment in June 2020, allowed temporary layoffs due to the impact of COVID-19 to continue for up to 24 for weeks, or until August 30, 2020, whichever came first. While this was welcome news, the issue of the automatic “deemed terminations” of temporarily laid off employees manifested itself again for employers after August 30th.
The Employment Standards Act allows for an exemption from its requirements for payments on termination (even group terminations, discussed below) when an employment contract becomes “impossible to perform due to an unforeseen event or circumstance”.
The Employment Standards Tribunal has determined that this exemption must be interpreted narrowly, and in a manner that encourages employers to comply with the minimum standards set out in the Act. Even where businesses have experienced significant financial hardship owing to the COVID-19 pandemic, the Tribunal has held in some cases that the employer cannot rely on the exemption because the employment contract remained possible to perform.
GROUP TERMINATIONS
If an employer intends to terminate 50 or more employees at a single location within a two-month period, additional notice of termination is required. In these circumstances, Section 64 requires that notice be provided to each of the employees who will be terminated, the trade union representing the employees (if applicable), and the Minister of Labour. The notice provided must specify the number of employees to be affected, the effective date or dates of the termination, and the reasons for the termination.
In certain situations, an employer may lay off a group of 50 or more employees without immediately terminating them. However, as explained, a layoff is deemed to be a termination if it exceeds 13 weeks in a 20-week period or exceeds the period of recall under a collective agreement. Therefore, in situations where the prospect of re-employment is slim, it may be advisable to provide advance notice of termination pursuant to Section 64 in order to reduce any future liability for termination pay.
The group notice requirements are as follows:
| NUMBER OF EMPLOYEES | NOTICE REQUIRED |
|---|---|
| 50 to 100 employees | 8 weeks before effective date of first termination |
| 101 to 300 employees | 12 weeks before effective date of first termination |
| 301 or more employees | 16 weeks before effective date of first termination |
An employer may provide either working notice, payment in lieu of notice of termination, or a combination of both, provided that the sum is equal to the amounts set out in the above table.
INEFFECTIVE NOTICE
The notice required under the act will not be effective if the employee is on annual vacation, approved leave of absence, or temporary layoff. In addition, notice is not effective if it coincides with a period during which an employee is absent from work due to a strike or lockout, or because of medical reasons (including short-term sick leave, long-term disability or workers’ compensation leave).
If an employee continues to work past the end of the notice period, prior notice of termination is deemed void and the employment relationship continues. In order to meet your legal obligations, you would have to provide new notice or payment in lieu of notice to terminate an employee who has worked beyond a prior notice period.
Finally, once proper working notice is provided, it is not advisable to make changes to the employee’s wage or any other term or condition of employment without the written consent of the employee. You may even need the consent of the trade union representing the employee if the employment is governed by a collective agreement. Changes to employment that may be prohibited may include a change in duties or responsibilities, limiting of authority, or a reduction of hours.
EXCEPTIONS
The act provides for several exceptions to the notice. Employees hired under certain arrangements, such as under a definite term contract, are not entitled to notice of termination, or payment in lieu of notice. Similarly, the Employment Standards Act exempts employers from termination pay and group termination pay in the context of some unforeseeable events and circumstances.
For more information about these exceptions, visit Employment Standards Act – Exceptions.
For more information regarding temporary layoff and group terminations, visit the Termination of Employment Factsheet, as well as:
go2HR JOB BOARD
go2HR is pleased to partner with the healthcare sector to allow healthcare employers (including private care homes and retirement residences) to use the go2HR Job Board for their hiring needs. This will help displaced tourism and hospitality employees find temporary work, to ensure their livelihood is not disrupted.
Information provided by Ryan Anderson and Cameron R. Wardell, employment lawyers, and Jakob Sanderson, articling student, with Mathews Dinsdale & Clark LLP. The information provided in this article is necessarily of a general nature and must not be regarded as legal advice. For more information about Mathews Dinsdale & Clark LLP, please visit mathewsdinsdale.com.
go2HR is BC’s tourism and hospitality, human resources and health & safety association, driving strong workforces and safe workplaces that deliver world-class tourism and hospitality experiences in British Columbia. Follow us on LinkedIn or reach out to our team.
