Layoffs, Restructuring, Terminations, Oh My

When is Employment Terminated?

I answer many questions from employee and employer clients about what happens to the employment relationship when someone has been laid off, or let go due to a restructuring or shortage of work. This is never a happy time for businesses or workers. Employees want to know, have I been fired if the letter says it is a lay off? Employers ask, do we need to provide notice or severance pay if we are in financial hardship? The answer to both questions is in most cases, yes. This blog post applies only to non-unionized employees in British Columbia.

The letter says laid off. Have I been fired?

The answer to this question, in most cases, is yes. The essence of a job is that the employer provides work to be done and pay, and the employee does the work. In a lay off, the employer is no longer providing work to be done or pay, so in most cases, employment has ended.

Employers can lay off an employee, without effectively terminating employment, if:

1. the employment contract expressly allows for temporary layoffs;
2. layoffs are a well-known and longstanding industry-wide practice (for example, logging where work cannot be performed during a "break up"); or
3. the employee agrees to the lay off.

Even if one of these conditions apply, the layoff must be short-term and temporary. In the non-union context, Section 1 of the BC Employment Standards Act limits the length of temporary lay offs of a maximum of 13 weeks in any period of 20 weeks.

If you don't fit into one of these conditions, a lay off of any length is the same as a termination of employment.

We are laying off an employee because we need to downsize to stay afloat, do we still have to give notice or severance pay?

The answer to this, in most cases, is yes. Unless you fit into one of the three categories above, a lay off is the same as termination of employment "without cause." This means that reasonable notice of termination, or pay in lieu of that notice (aka severance pay), must be provided. Unless there is a bankruptcy or similar legal process underway, the financial situation of the employer does not impact the requirement to provide notice or pay severance.