Temporary Layoff Laws in Canada Amidst COVID-19

Across Canada, most non-essential businesses have faced immense pressure to shut down their operations and this has created a number of issues with regard to temporary layoffs or furloughs across the country. In Canada, an employer does not have the right to temporarily lay off an employee unless it has been expressly agreed to in a contract. This has left many operations in jeopardy due to the fact that they have no work available for their employees, but they also don’t have the legal rights to temporarily layoff their workers.

If an employee signed a contract that agrees to the terms of a temporary layoff, each province and territory across Canada has their own terms that govern the circumstances that are acceptable for temporary layoffs. Each province or territory has its own notice requirements and length of term for which a temporary layoff can be accepted. Anything past this term is considered a termination and severance pay would be triggered. There is a provision that temporary layoffs may be issued without notice in the case of exceptional circumstances, but there is no confirmation that the status of COVID-19 in Canada, as it is presently, would constitute the enactment of the exceptional circumstance clause.

A massive emergency aid fund has been created in Canada that is being used as a way to stabilize millions of employees that can’t work due to COVID-19. However, because these policies are being created so quickly, there are a number of issues that are being ironed out on a daily basis. The legislation in Canada appears to be changing on a weekly basis, with a number of stipulations being backdated to earlier in March.

If an organization does not have any temporary layoff policies then the organization may be at risk of severely affecting their future employability. Almost 98% of businesses in Canada are considered small businesses, and these organizations may be at risk of declaring bankruptcy and closing permanently if they cannot put their employees on a temporary layoff for the period of time that the business will be closed.

In order to support the Canadian economy, some amendments to provincial employment standards legislation (specifically to permit the issuance of temporary layoffs due to COVID-19) will be necessary. This might also lead to the potential extension of temporary layoff clauses during this period of pandemic. Employment insurance has also increased the available support available for those that have been laid off due to COVID-19, that are sick due to COVID-19 or those that must take care of dependent family members either due to being sick from COVID-19 or because schools have been shut down.

While it is important to support employees through this time, the nation must also think about the support available for small businesses. Funding is becoming more accessible to businesses in an effort to provide more cash flow (and to stabilize the economy) during these uncertain times. The continual amendments to provincial and federal legislation will hopefully provide small businesses with protection to recuperate from this financially devastating time.

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