In the context of the novel coronavirus, employers in British Columbia, including local governments, have been increasingly faced with difficult decisions relating to contracts of employment. Employers are contending with the need to balance their obligations towards employees with the practical and financial realities of maintaining operations. In the present circumstances, employers are therefore increasingly resorting to layoffs as a means of attenuating the financial and operational impact of COVID-19.
Generally speaking, a layoff is a period of time during which an employee does not work and, typically, does not receive compensation (though a reduction of an employee’s regular weekly wages by 50% or more, as averaged over the preceding eight weeks, is also considered to be a layoff). During the period of layoff, the employment relationship continues and, as such, layoffs are meant to be temporary. If, however, the period of layoff exceeds the maximum allowable period for temporary layoff, then the employment may be considered to be terminated as of the date on which the layoff commenced. Employers are sometimes surprised to learn that layoffs are generally only permitted under the Employment Standards Act, RSBC 1996, c. 113 if the layoff is expressly agreed to in the contract of employment or collective agreement, or if the employee otherwise consents. Temporary layoffs may also be permitted in industries where work cannot be performed during a “break-up” period, such as seasonal employment where work is predictably halted from time to time.
Prior to the onset of the COVID-19 pandemic, the maximum period of temporary layoff was 13 weeks in any period of 20 weeks. On May 4, 2020, this period was extended to a maximum of 16 weeks for layoffs related to COVID-19, in order to allow employers to better manage the impact of the pandemic. Most recently, on June 25, 2020, the provincial government extended the temporary layoff provision to a maximum of 24 weeks for layoffs relating to COVID-19. This change reflects the current availability of the federal Canada Emergency Response Benefit, which now lasts for a maximum duration of 24 weeks.
The new layoff provision is set to expire on August 30, 2020. Though it is unclear at this time how long the pandemic will last, the extension is intended to provide employers and employees with certainty and flexibility as they plan for an eventual return to work. Notably, an employee who has not consented to an extension of a period of layoff is entitled to decline the extension and treat the employment relationship as having been terminated, giving rise to the usual employer obligations upon termination of employment, such as compensation for length of service. The provincial government has been clear that the extension of temporary layoffs due to COVID-19 is meant to prompt employers to reach agreement with their employees regarding temporary layoffs, including any extension within the allowable period of 24 weeks, with the goal of supporting both the economic recovery of employers and the availability of employment for workers.
Given the relatively recent impact of the novel coronavirus and the constraints it has placed on regular court operations, it will likely be some time before non-urgent employment matters relating to COVID-19 are thoroughly scrutinized by the courts. Judicial commentary and refinement of our understanding of employer and employee obligations and entitlements is likely to be increasingly available over the next few years. In the meantime, employers must continue to contend with the impact of COVID-19 while carefully following relevant employment standards legislation and related commentary provided by the provincial government. For local governments, who employ a number of workers in a vast array of industries impacted by the pandemic, the obligations owed to employees will need to be regularly reevaluated as our approach to employment in the context of COVID-19 is developed in the ensuing months.
Employment relationships differ from one situation to the next. Deciding whether and how to implement layoffs will depend on a consideration of the particular circumstances of each employment contract. For local governments looking to obtain legal advice regarding layoffs or other employment or labour matters, contact Kerri Crawford at email@example.com.