Current and accurate as of July 10, 2020
This update addresses recent changes to provincial and federal employment standards legislation related to the ongoing Coronavirus pandemic and its effects on businesses and their workforces.
We encourage you to reach out to discuss how these changes will impact your business operations.
The temporary layoff provisions of the Employment Standards Code (“the Code”) permit an employer to suspend an employee’s employment for a period of up to 60 days, after which time employment will be deemed to be terminated unless the employer has recalled the employee to work or further extends the layoff period in accordance with the Code. On April 6, 2020, in response to the COVID-19 pandemic and resulting business slowdown, the government extended the permitted period for temporary layoffs to 120 days for layoffs which occurred on or after March 17, 2020.
The Code’s temporary layoff provisions were again amended on June 26, 2020 when Bill 24 (the COVID- 19 Pandemic Response Statutes Amendment Act, 2020) became law in Alberta. The Act has extended the maximum temporary layoff period to 180 days for employees who have been laid off for reasons related to COVID-19. This further amendment applies to all employees who were already on temporary layoff as of June 18, 2020 and to all employees laid off after that time.
Federally-regulated employers are governed by the provisions of the Canada Labour Code (“the CLC”). Under the CLC, employers can temporarily layoff their employees for up to three months (if no notice with a recall date is provided) or up to six months (if the employer provides a notice with an expected recall date) before the layoff is deemed to be a termination.
On June 23, 2020, the federal government announced changes which extend the period of temporary layoffs under the CLC by up to six months. For employees laid off prior to March 31, 2020, the maximum layoff period is extended by six months or to December 30, 2020, whichever occurs first. For employees laid off between March 31, 2020 and September 30, 2020, the time period is extended to December 30, 2020 unless a later recall date was provided in a written notice at the time of termination.
For employees laid off after September 30, 2020, the previous time periods under the CLC will apply.
We can all only hope that the global economic and social disruption caused by the COVID-19 pandemic will not occur again in our lifetimes, but history tells us that business interruptions can, and will, occur in the future. The fires in Fort McMurray and the flooding in Calgary are but a few recent examples of situations which caused unexpected business closures leading to temporary layoffs, terminations of employment and changes to employee salaries and benefits. However, epidemics and natural disasters are not the only reasons that an employer may be required to reduce its workforce or its obligations to its employees.
In all of these situations, even if any changes are only temporary, employers risk expensive lawsuits and possible severance payments to their employees. For example, as we discussed in an earlier update, temporary layoffs are permitted by the Employment Standards Code but could be considered a constructive dismissal at common law, entitling an employee to sue for wrongful dismissal damages. All of these risks could be lessened or avoided entirely with some proper planning. Properly drafted and implemented contracts and policies give an employer the ability to make changes and temporarily suspend employment without incurring unnecessary liabilities.
We can assist your business in developing contracts and policies which will provide protection and the flexibility to make changes to get you through business interruptions both large and small. Please feel free to reach out and discuss your options with us at any time.
Please note that this is a rapidly changing and evolving situation, and that this information is based on our best knowledge at the current time. Due to the unique circumstances of every business, not all information is applicable to all employers, so please feel free to contact us with any questions or if we can be of assistance in any way.
Also, we note that this information is current as of July 10, 2020 and will be subject to change following this date.