The increase in layoffs that started during the pandemic seems to be continuing into 2024. While there is a lot of discussion in HR circles about the pros and cons of layoffs (this Harvard Business Review article highlights how the short-term cost savings provided by a layoff are overshadowed by bad publicity, loss of knowledge, weakened engagement, higher voluntary turnover, and lower innovation), the reality is that layoffs are often necessary. And HR plays a key role in managing and effecting lay offs.
The employment standards legislation in every jurisdiction allows employers to lay off employees – but there are significant differences in the law. If you have employees in more than one jurisdiction, it is important to understand these differences and the requirements that apply with respect to employees in each jurisdiction.
This article focuses on layoff legislation, but if you are subject to a collective agreement, it may also address layoffs. Be sure to review any applicable collective agreement. This article also does not deal with specific situations. The legislation in many jurisdictions includes special rules or exemptions for certain industries.
Know How Long a Layoff Can Last
A layoff is a temporary interruption of the employment relationship at the direction of the employer, usually because of a lack of work. The purpose of a layoff is to allow an employer to reduce its workforce for a period of time without triggering the employer’s obligations on termination of employment. Effectively, a layoff allows an employer to avoid (at least temporarily) their termination obligations. The legislation deems a layoff NOT to be a termination.
The employment standards legislation in each jurisdiction sets out the amount of time that an employee can be laid off. In New Brunswick, Nova Scotia and Prince Edward Island an employee can be laid off for no more than 6 consecutive days. In other jurisdictions, layoffs can last much longer. For example, in Alberta an employee can be laid off for a maximum of 90 days total in a 120-day period. Longer layoff periods also apply in Ontario, British Columbia, Manitoba, Quebec, Newfoundland and Labrador, Saskatchewan and to federally regulated employers.
There are other factors that may influence the permitted length of a layoff. In Manitoba, an employee can be laid off for not more than 8 weeks in a 16-week period. That period can be longer though if:
- an employer has made an application for a greater number of weeks and that application is approved by the director;
- the employer continues to make payments to the employee or make pension or group benefit contributions on the employee’s behalf; or
- if employees are notified upon hiring that lay-offs are a regular occurrence.
Like Manitoba, Alberta, the federal jurisdiction (in some circumstances), Newfoundland and Labrador, and Ontario (in some circumstances) allow a longer layoff period if the employer pays the employee’s wages and/or makes pension or benefit payments for the benefit of the employee.
Understand the Difference Between a Layoff and Termination
An employee who is laid off is deemed not to be terminated for the purpose of employment standards legislation, for the period of time permitted by the legislation. At the end of the permitted layoff period, the employee must either be recalled to work or they are deemed to be terminated. For that reason, it is important to clearly understand the permitted layoff period, and to clearly and accurately track the time that each employee has been laid off. In most jurisdictions, if an employee is laid off and not recalled to work within the required period of time the employee is deemed to have been terminated as of the first day of the layoff.
Remember that in some jurisdictions the time that an employee is laid off is cumulative over a certain period of time – the clock may not restart just because an employee was called back to work for a period of time. For example, in British Columbia an employee can be laid off for up to 13 weeks in any 20 week period. That means that an employee who is laid off for 11 weeks, called back for 2 weeks and then laid off again for 4 weeks would be deemed to have been terminated (they would have been laid off for 15 weeks in a 20 week period).
And also remember that in some jurisdictions the employer can extend the layoff period by paying the employee’s wages and/or making pension or benefit payments for the benefit of the employee. Read the legislation closely to ensure that you are calculating the layoff period correctly.
For more information about mass terminations, see our earlier post.
Give Proper Notice – If Required
In many jurisdictions, you must give notice of a layoff. Layoff notice is required under the legislation in Alberta, Newfoundland and Labrador, Prince Edward Island, and Saskatchewan.
In Alberta, the layoff notice must be in writing and must:
- state that it is a temporary layoff notice,
- state the date that the layoff is to commence, and
- include a copy of sections 62, 63 and 64 of the Employment Standards Code.
In Newfoundland and Labrador, the amount of notice that an employee must be given depends on their length of employment (similar to a notice of termination of employment). The notice can be given conditionally upon the happening of a future event if the period of the notice is not less than the notice period required. The notice has no effect if the employee continues to work beyond the date specified in the notice.
In Prince Edward Island, employees who have worked continuously for 6 months or more must be given a notice of layoff. And a layoff can be no longer than 6 consecutive days.
In Saskatchewan, employees must be given written notice of a layoff. They must be given the same amount of notice as with a termination or may pay the employee in lieu of notice. For example, if an employee would be entitled to 4 weeks notice prior to a layoff, the employer can either provide written notice 4 weeks before the layoff or layoff the employee immediately and pay the employee 4 weeks in lieu of the notice period that is required.
Recalling Employees
In Alberta, employers must also provide a recall notice when requesting a laid off employee return to work. The recall notice must:
- be in writing,
- be served on the employee, and
- state that the employee must return to work within 7 days of the date that they are served with the notice.
If an employee who is not bound by a collective agreement with recall rights for employees following a layoff fails to return to work within 7 days of being served, the employee is not entitled to termination notice or termination pay if the employer decides to terminate the employee for failing to return to work.
Rights Related to Layoffs
Employers need to be cautious when laying off employees who have requested or been granted a leave of absence. Several jurisdictions provide specific protections for these employees. In Manitoba, an employer cannot layoff an employee because they intend to take, or do take, a leave of absence. In New Brunswick, employers cannot lay off an employee who has been granted a leave. And in PEI, an employee that has taken a leave is protected from layoff for reasons arising from the leave alone.
In Nova Scotia, employers must be careful when laying off (or dismissing or suspending) an employee who has recently taken a leave of absence. An employer discriminates against employees if they lay off an employee within 3 months of that person requesting/taking a leave of absence unless the employer can prove:
- the employee is guilty of wilful misconduct, disobedience or neglect of duty;
- the reason for the lay-off is beyond the control of the employer and the employer has exercised due diligence to avoid it; or
- the employer, in good faith and for legitimate business reasons, ceases operation or eliminates the employee’s position.
Quebec also protects an employee from termination while they are laid off. An employee cannot be given notice of termination while they are laid off (other than in specific circumstances).
Key Takeaways
Layoffs can be complicated, and it is critical to get them right. Here are the key takeaways for HR professionals:
- Make sure you understand the specific requirements of each jurisdiction where you are laying off employees. Do you need to provide notice of the layoff? How long can you layoff employees before they are deemed to be terminated? Are there things that you can do to extend that period, for example, by making payments to the employee?
- Keep clear and accurate records. Clearly document the start and end dates for each employee who is laid off. Pay attention to any cumulative requirements – remember that recalling an employee does not always restart the clock for layoffs.
- Be mindful of employee’s rights. In particular, pay attention to the rights of any employee who has requested a leave of absence, is on a leave or has recently taken a leave.
- If you are unsure, or have questions, you should seek legal advice.
How Compliance Works Helps HR Professionals
Understanding your employment law obligations means looking at a number of different sections of employment standards laws, including both the Acts and Regulations. It can be hard to know where to look, or to feel confident that you looked at everything.
Compliance Works makes it easy to identify all of your requirements by pulling together all of the related requirements from Acts and Regulations – including any special rules or exemptions – in an easy-to-read plain language summary that is always up to date, providing you with confidence that you have it all covered.
