Many employers assume that if work slows down, they can simply “lay off” workers temporarily until things pick up again.
Some employees in this situation may wonder if they have been dismissed. Under the B.C. Employment Standards Act (ESA), a “temporary layoff” occurs when:
- an employee with a right of recall is laid off, and the layoff extends beyond the period specified within which the employee is entitled to be recalled (generally this applies in certain unionized situations), or
- in any other case, a layoff of up to 13 weeks in any period of 20 consecutive weeks.
This, however, is simply a definition of the term “temporary lay-off”. It does not give an employer the right to temporarily lay off an employee. BC case law has established that employers are only able to temporarily lay off employees in certain situations. Examples include when an employer is able to establish:
- the employee has consented to being temporarily laid off; or
- the temporary lay-off is provided for in the employment contract, either as an express term, or as an implied term based on well known, industry wide practice.
To properly be considered a lay off and not a dismissal, the employer will generally be required to prove that the employee was laid off due to a legitimate shortage of work. If it is unable to do so, it risks the “layoff” being, in the eyes of the law, a “dismissal.” Though not always the case, this typically prompts obligations to provide the employee with reasonable notice of the dismissal or payment in lieu of such notice (commonly referred to as a severance payment).
If the employer is able to establish one of the above factors, then the limits set out in the ESA apply. If the employee has been laid off for more than 13 consecutive weeks, and the period has not been extended either by agreement of the employee or the Director of Employment Standards, then the employee is legally considered to have been permanently terminated, and is entitled to reasonable notice of dismissal or payment in lieu of such notice.
An employee is also able to commence a legal action for wrongful dismissal, even before the 13 week period has expired. This can occur if for example the manner in which the layoff/dismissal was handled makes it clear that the employee has been terminated, despite the employer’s use of the term “temporary lay off.”
Once the employee has been laid off for 13 or more consecutive weeks, section 63(5) of the ESA states that the employee “is deemed to have been terminated at the beginning of the layoff.”
Where an employer wishes to temporarily lays off an employee, it should first carefully considering whether it will be able to establish that it had the right to do so. If it may not be able to do so, further steps may need to be taken, or potentially a different employee selected.
An employee who has been laid off, but who feels that it was in substance a dismissal ought to promptly look into his or her legal rights. A unionized employee ought to immediately check the collective agreement, as action may be required within a very tight time frame.
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