During the current COVID-19 pandemic, there’s been quite some confusion and stress in the workplace. Many companies have been faced with the difficult situation of downsizing their work force. Employees are faced with termination or layoffs.
More often than not, people use the terms ‘layoff’ and ‘termination’ interchangeably without realizing that each term means different things.
A Termination denotes the end of an employment relationship, meaning, you’re not going back to the workplace even after the pandemic subsides and the departure from the workplace is rather permanent.
A Layoff means a temporary interruption in the employment. You are still an employee. The Employment Standards Act sets outs the parameters for a layoff which can be up to 13 weeks in 20 consecutive weeks, or up to 35 weeks in 52 consecutive weeks in some circumstances. If you are not called back, then it will be considered a termination.
Can an employer layoff its employees?
Short answer is, it depends. Employers do not have the automatic right to layoff its employees.
When does an employer have the right to do so?
There are a few situations where an employer has the right to layoff its employees.
If the employment contract or, in a unionized workplace, if there is a specific provision within the collective bargaining agreement that gives the employer the right to layoff its employees.
The other circumstance is through past practice. This may apply in some industries where work is seasonal. For example, the construction industry. To claim past practice, the employer would need to show that they have done so in the past or that there’s a pattern of shortage of work.
When no right to layoff is in an explicit agreement and there has been no past practice, an employer does not have a right to lay you off. Even if an employer calls it a layoff, it’s treated as a termination, or more accurately, constructive dismissal.
What can you do in that case?
As an employee, you can accept it and apply for EI or the Canada Emergency Response Benefit (CERB). There is a risk of doing so, however. You may be setting a precedent which your employer can use later on as forming past practice.
If you don’t want to accept it, you can choose to dispute it and assert your termination rights. This also carries with it risks. To assert your termination rights, it becomes a legal fight. Whether it’s by way of a demand letter or litigation. This usually means a longer wait time. An employer may be not willing to negotiate or, considering the current economic hit, not be able to provide much.
That brings us to the third option, written agreement for temporary layoff. This is a negotiated agreement between employer and employee where the employee agrees to accept the temporary layoff. This benefits the employee because in the agreement you can ensure that specific language limits this to the current one-time situation and does not represent your acceptance of layoffs are a common practice which can later on be used for another layoff. This also benefits employers as you may be able to reduce your work force to account for the shortage of work, even where you have no right of layoff, in order to carry you over this difficult time.
I highly encourage employers and employees to work together in this time of hardship.
If you are an employee, it’s paramount to consult an employment lawyer and get a review of your employment contract and employment policies.
If you are an employer, it’s important that you also speak to an employment lawyer regarding your employees’ contracts and policies so as to limit your exposure to litigation.
Disclaimer: Information made available on this website in any form is for information purposes only. It is not, nor is it intended to replace, legal advice. Contact Chu & Huang Law to discuss a specific legal issue and please note that contacting Chu & Huang Law, on its own, does not create a lawyer-client relationship.