COVID-19: Can My Employer Lay me Off?

This article applies to non-unionized workplaces.  In the unionized context, a collective agreement will set out the employers ability to lay employees off, if any, and the rules they must follow.

Layoffs

In most workplaces an employer has no legal right to temporarily lay an employee off or to reduce their salary.  The only exception to this would be if you have a written employment agreement that states that the employer may reduce your hours, reduce your pay, or lay you off.  Most contracts have no such clause.  They are the exception, rather than the rule.

The British Columbia Employment Standards Act requires employers to pay termination pay in accordance with the Act on most terminations, except during temporary layoffs, which can be no longer than thirteen weeks.

However, the Employment Standards Act only sets the employee’s minimum rights.  At common law, an employer is not allowed to unilaterally alter the terms of the employee’s contract (written or unwritten) without their agreement.   If the change is significant enough, the employee can treat the change as a termination and advance a claim for severance pay – this is what is meant by a constructive dismissal.

Constructive Dismissal

An employee who has been constructively dismissed is entitled to severance.  When there is an employment contract specifying or limiting the amount of severance, the employee will usually be entitled to this amount.  All other employees are entitled to the minimum set out in the Employment Standards Act, and may be entitled to further severance calculated in accordance with common law principles.

Although severance at common law can often be significant, particularly for long serving employees, that amount can be reduced based on the employee’s ability to mitigate their damages.  In some cases, the courts have found that the employee has failed to mitigate their damages by taking up alternate work with their original employer.  So in the context of a Covid-19 lay off or pay reduction, the employee’s severance claim can be potentially limited.

Because a constructive dismissal requires the employee to treat the employment relationship as a termination – and essentially walk away from their position – it is crucial that employees planning such a move seek out legal advice before doing so.

COVID Leave under the Employment Standards Act

Employees should also consider whether the lay-off or pay reduction was in response to a protected “Covid Leave” pursuant to the recent amendments to Part 6 of the Employment Standards Act.  If so, the employee could be entitled to see compensation through the Employment Standards Branch.

Negotiated Agreements

Finally, for many employees, it may make sense to continuing working for the employer and accept the temporary layoff or pay reduction.  In those cases, it is important that the agreement be documented in writing.  It may be useful when doing so for the employee to specify that they are only agreeing to temporary layoff as proposed, and not to any future layoffs or changes without further agreement.