Layoff Considerations During COVID-19 Pandemic

Layoff Considerations During COVID-19 Pandemic

Many employers may be looking to lay off employees due to the significant effect the pandemic has had on their businesses. While layoffs may be an effective cost-saving measure for employers, there are important considerations prior to taking this severe step.


Temporary Layoffs during COVID

A temporary layoff occurs when the employer cuts back or stops the employees work without dismissing them—it is usually done when there is a shortage of work to mitigate for seasonal business loss and/or economic hardship.

Employers must make sure that any temporarily layoff is consistent with the Employment Standards Act, 2000 for provincially regulated employees, and the Canada Labour Code for federally regulated employees. Employers do not have to provide the employees with a specific recall date or written notice of the layoff.

However, if an employee is laid off beyond the permittable time period under statute, the layoff will be considered a dismissal, and  the employee will be entitled to termination entitlements.

Where employment agreements do not expressly permit temporary layoffs—even if the layoff is consistent with statute provisions and would otherwise be deemed temporary—the layoff may amount to constructive dismissal. In such a case, the employee is still obligated seek and accept any comparable employment, even when offered by the same employer. Otherwise, the employee would be considered as having failed to mitigate their damages.


Permanent Layoff

A permanent layoff on the other hand, is for all intents and purposes a dismissal. It becomes unlawful when proper notice or payment in lieu is not provided to the employee, and the employee would be entitled to seek damages for wrongful dismissal.

With any act amounting to dismissal, even during times of a pandemic, employer should provide employees with the entitlements they would expect to receive if they were dismissed without cause.


Alternatives to Layoffs During COVID

Due to the health crisis, the federal government has taken various measures to assist businesses in maintaining their employees by implementing a temporary wage subsidy and a work-sharing program.

The temporary wage subsidy permits small and medium-sized employers to be given wage subsidy of 10% of employee remuneration for three (3) months, for maximum of $1,375 per employee and $25,000 per employer.

The Work-Sharing Program allows eligible employers to reduce employees’ workweeks while employees receive employment insurance (EI) benefits for the days they are not working.

While employers and employees can consult with one another about further alternatives, such as using vacation pay during a layoff, employers should ensure they have the employee’s express consent.


Contact Us for Help

Layoffs during COVID are common. If you are an employer who has questions about layoffs during this difficult time, or an employee who has been laid off or is seeking to clarify your rights, our team of experienced employment and human rights lawyers are happy to help. Contact us at  1 (800) 771-7882, or email [email protected] and we would be happy to assist.



Disclaimer: This blog is not intended to serve as, or should be construed as legal advice, and is only to provide general information. It is in no way particular to your case and should not be relied on in any way. No portion or use of this blog will establish a lawyer-client relationship with the author or any related party.