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COVID-19: My Temporary Layoff Period is Expiring – Now What?

April 14, 2020

Temporary Layoff Alberta

Author: Kevin Stenner

Government Extension of Temporary Notice from 60 Days to 120 Days

The COVID-19 pandemic has caused significant and harsh economic challenges to businesses in Alberta. In response to these challenges, many businesses have chosen to temporarily lay-off their employees under section 62 of the Employment Standards Code.

The Code provides that an employer who wishes to maintain an employment relationship without terminating the employment of an employee may temporarily layoff that employee for 60 days. On April 6, 2020, the Government of Alberta increased this 60 day time limit to 120 days retroactive to March 17, 2020. During a temporary layoff, an employer may recall an employee on 7 days’ notice (section 64 of the Code) or seek to extend the temporary layoff period (section 63 of the Code).

How Can a Temporary Layoff Be Extended?

As the 120 day temporary layoff period will expire for many people in late July, section 63 of the Code will come under increased scrutiny. Currently, a temporary layoff can be extended under the Code if the employer, with the agreement of the employee, pays the employee’s wages or an amount instead of wages, or makes payments for the benefit of the employee in accordance with a pension, insurance or similar plan. If the temporary layoff expires, and it was not extended in accordance with section 63 of the Code, an employee is to be paid their termination entitlements.

To date, there has been very little judicial consideration of section 63 of the Code. Although it is clear that an employer must make some payment to an employee in consideration for the employee agreeing to extend the layoff, it is not clear what the process for this is and if there is a minimum financial threshold that must be met before a Court would find that an employee agreed to an extended layoff.

COVID-19 Employer Considerations

If you are an employer who may be looking to extended a temporary layoff past the 120 day limit, you should be thinking about the following questions well in advance of the layoff expiring and seek legal counsel:

  • Do I have the contact information of my employees?
  • If I need to extend a temporary layoff, how much longer do I need?
  • As a temporary layoff can arguably be deemed to be constructive dismissal, what are my risks if I further extend the layoff?
  • I will need the written agreement of my employees to any extension of the temporary layoff, how can I get this before the layoff expires?
  • What amount should I pay my employees in consideration for extending the temporary leave?
  • If my employees refuse to agree to the extension of a temporary leave, what termination entitlements are they owed?

The key for any employer in this situation is to mitigate the risk of an employee alleging constructive dismissal by having the employee consent in writing to any agreement respecting the extension of a temporary layoff.

COVID-19 Employee Considerations

As an employee, if your employer is seeking to extend your temporary layoff, there are several considerations to be made when evaluating the offer:

  • What is the availability of alternative work?
  • What is the likelihood of your employer recalling you?
  • Is your employer at risk of closing-down?
  • What would your entitlements be if you were terminated?

Employees also have a duty to mitigate any loss. In the context of a temporary layoff, a Court could decide that the employee should have mitigated their loss by accepting the temporary layoff or by agreeing to an extension of that layoff.

As temporary layoffs present numerous issues and considerations for employees, it is prudent to engage legal counsel in order to help you navigate your specific circumstances.

Have COVID-19 Questions?

We at Carbert Waite LLP would be happy to assist you with any legal questions that you have arising from the COVID-19 pandemic or otherwise. Please feel free to contact any of our lawyers for assistance.

The above information is current as of the time of publication, but, due to the fluid nature of the Government’s response to the pandemic, you should seek legal advice before relying on the above information. You should also seek legal advice if your employment agreement or collective bargaining agreement contains a temporary layoff provision as the above information may not apply.

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