Covid Layoffs are Ending in BC, Now What?

Covid Layoffs are Ending in BC, Now What?

For workers and businesses in BC, ongoing changes to the temporary layoffs allowed by the Employment Standards Act (“ESA”) have been hard to track.  Pre-pandemic, temporary layoffs could not be longer than 13 weeks.  During the pandemic, our provincial government extended the allowed layoff length a few times and we are now coming to the end of the latest extended layoff period.

At the time of writing this blog, temporary layoffs due to Covid that started before June 1, 2020 are to a maximum length of 24 weeks, or must end on or before August 30, 2020, whichever is sooner. Assuming there are no more changes, what does this mean for businesses or workers covered by BC Employment Standards with temporary layoffs that started before June 1, 2020?

1. Deemed Termination

If nothing happens, and a worker remains on temporary layoff as of August 30, 2020, their employment is deemed to be terminated by the ESA. That means that their employment relationship ends and they are generally owed severance pay of at least the minimum amounts under Section 63 the ESA of 0-8 weeks, depending on length of service. Severance could be much more than these minimums if there is a group termination of more than 50 workers at a single location, or if common-law severance is owed.

There is an exception to severance pay requirements were an employer can prove that Covid-19 made the employment contract impossible to perform (see Section 65(1)(d) of the ESA).  This is called “frustration of contract” and is assessed on a case-by-case basis.  Not every business that has been impacted or had to downside because of Covid-19 will be able to use the frustration defense, and this is a new application of law, so quite unpredictable.

2. Variance

Employers in BC have the option to apply for a “variance,” to extend the temporary layoff period past August 30, 2020. Employers must submit an application for a variance by August 25, 2020, and it must include the expected recall date, as well as evidence that 50% or more of impacted employees agree with the variance request.  The variance application link and information are here.

3. Return to Work

The final option is for businesses to bring workers back from layoff before August 30, 2020.  This may involve a return to the worker’s pre-layoff job and schedule, or there may be changes needed.  There is potential for disagreement and possibly constructive dismissal claims based on changes, which are complex legal matters.  One thing that is set by the ESA is if wages are reduced by 50% or more, the worker is still considered to be on layoff, and so the deemed termination could still take place.

In this unprecedented time of change to our employment laws, it is important to verify the current status before you make decisions.  The best source of up-to-date information is the BC Government’s Employment Standards Act website.  Seek advice from an employment lawyer if the ESA does not apply to you, if you are considering a return to work agreement or to get information about severance requirements.