Article

What Employers Need to Know About Temporary Layoffs

Please Note: This article has been updated with information related to COVID-19 and layoffs. While we encourage each employer to do everything in their power to avoid layoffs, we understand there’s a need for this information and we want to service that need. Find quick links to resources below.

It is not uncommon to hear employers talk of “laying off” employees, particularly when business is slow. In these situations, the employer’s intent is not to terminate the employment relationship, but to utilize temporary layoffs until business picks up.

While a temporary layoff is a perfectly logical solution for dealing with a slowdown in business, many employers are unaware that the Employment Standards Act (British Columbia) does not permit temporary layoffs except in very limited circumstances.

When Can You Lay Someone Off Temporarily?

The Employment Standards Act (British Columbia) only allows an employer to temporarily layoff an employee in the following situations:

  • The employee’s contract expressly permits it.
  • The employer is in a business in which temporary layoffs are a common industry-wide practice. For example, in logging, work cannot be performed during the “break-up” season.
  • The employee agrees to the temporary layoff.

How Does a Temporary Layoff Work?

Where a temporary layoff is permitted, the maximum length of time that an employee can be laid off is 13 weeks in a consecutive 20-week period.  The 20-week period begins on the first day of the layoff.

If an employee earns less than 50% of his or her regular wages in any week that falls within the 20-week period, that week will also count towards the 13-week period.

Termination of Employment

If an employer lays off an employee, except in the circumstances set out in the Employment Standards Act (British Columbia), the layoff will amount to a termination of the employee’s employment and the employee must be paid termination/severance pay.

A layoff also becomes a termination of employment once it exceeds 13 weeks in a consecutive 20-week period.

Employer Tips Regarding Temporary Layoffs

  • Remember that a layoff, regardless of whether it is temporary or not, amounts to a termination of employment unless it falls within the very limited situations contemplated in the Employment Standards Act (British Columbia).
  • If your business is regularly subject to identifiable “slow” periods, consider inserting a clause that permits temporary layoffs into your employment agreements.
  • Check whether your business is in an industry in which temporary layoffs is a common industry-wide practice.
  • If your circumstances do not fall within the first two scenarios of legally permissible layoffs, check whether the employees will consent to a temporary layoff and make sure you get their consent in writing.

Layoffs and Employment Insurance

The Government of Canada created a new, simplified Employment Insurance (EI)  program to provide income support to eligible individuals who remain unable to work.

People who don’t qualify for EI can apply for one of these programs:

At Small Business BC, we’ve got the resources and supports you need for your business to succeed. This November, we’re offering all webinars and Talk to an Expert Advisory sessions for FREE.

Want to grow your customer base? Add your business to our BC Marketplace and tap into a province-wide audience looking to shop local and support small businesses like yours.