Temporary Lay-Offs During the COVID-19 Pandemic

Common questions regarding how COVID-19 and temporary lay-offs work.

March 31, 2020


 

Many Canadians are finding themselves out of job during the coronavirus pandemic.  While many have been outright dismissed from their employment, some workers were told that the lay-off is temporary and that their employer expects to call them back.  Here, we will answer some common questions about temporary lay-offs and what is means for employees during the pandemic.

Can I be temporarily laid off from my job during the outbreak until business improves?

The answer for this is not an easy yes or no.  The current state of the law says that employers are not automatically allowed to temporarily lay people off, pandemic or not.  What this means is, for an employer to temporarily lay off an employee it needs to have included in its employment contract a clause that states that temporary lay offs are allowed.  Without language indicating as such, temporary lay offs are considered constructive dismissal and the employer is then on the hook for providing termination/severance pay.

There are exceptions, however, such as construction or seasonal workers where it is assumed that during the off-season workers will be laid off.

Considering the current state of the world during the pandemic, it is unclear whether or not a temporary lay off, regardless of contractual language, will still be considered a constructive dismissal.

Can the temporary lay off be considered frustration of contract during the pandemic?

A frustration of contract is when a situation arises, through no fault of either party, where the contract that the parties have entered into is now impossible to fulfill.  In an employment context, this would mean that as a result of the COVID-19 pandemic, the employee is not longer able to work and the employer is no longer able to provide work and therefore the employment contract between them can no longer be completed.

Therefore, yes, a temporary lay off in this circumstance COULD be considered a frustration of contract.  As a result of the frustration of the contract, no party is liable.  This means that your employer would not have to pay you any termination or severance pay.

However, every case is different and you should contact an employer lawyer to discuss your particular case to determine your options.

Can I agree to be laid off even if my contract doesn’t allow for a lay off?

Yes, you can agree to be laid off with the promise of a recall to your position when business picks back up.  If your employer asks you if you will consider a lay off, they must give you appropriate time to consider this option.

My employer sent me on an unpaid leave, is this different then a lay off?

No, an unpaid leave is a lay-off.

Can my employer provide additional compensation if I am laid off?

Your employer can offer to top up your employment insurance benefits.  This means that if you are laid off and you are collecting EI benefits, your employer can pay you wages to top up your EI benefits to the maximum threshold.  This is not a requirement for your employer to do and, considering the fact you were laid off, they may not have the financial resources to do so.

How to avoid temporarily laying workers off?

The Government has announced up to a 75% wage subsidy for employers who have experienced a decline in business of at least 30%.  With this resource, many employers will be able to retain employees instead of laying them off.  Visit the Government of Canada website here for more information.

If you have questions regarding lay-offs or would like your case assessed, contact Ertl Law for a free phone consultation toll free at 1-888-222-6184 or 416-572-9900.

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