Temporary Layoffs – Guide For Employers & Employees

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You were laid off? Oh no! That’s awful. I’m so sorry. You know what, they never appreciated you the way you deserve. What a lousy bunch of – temporarily? Ohhhh. Huh. So, you’re not fired? Ok. Refresh my memory on this whole temporary layoff thing!

What Is A Temporary Layoff?

Chances are, you’ve heard of temporary layoffs. Maybe you’ve wondered if this could happen to you and, if it did, what exactly that would mean.

A temporary layoff is the cutting back or complete cessation of an employee’s employment with the understanding that they will be called back to their full-time position within a specified period of time. A temporarily laid off individual is still considered an employee, even if they are not working. This can mean that they are not working at all, or even simply earning less than half of their regular wages.

Temporary Layoffs – A Solution for Hard Times

A temporary layoff is a way mitigate economic hardship for both employer and employees. Temporary layoffs are often brought on by things like economic downturn, shortages of work and seasonal employment.

Temporary layoffs are most common in union environments where collective bargaining agreements determine the parameters of a layoff such as which employees are the first to return to work.

A temporary layoff allows employers to avoid severance or termination costs as long as the employee is recalled to work within 13 weeks of the layoff’s commencement. Though it would certainly be appreciated by their employees, employers have no obligation to provide notice of a layoff. Additionally, employers are not required to give termination notice until the last day of the layoff should it become clear that the layoff will have to become permanent.

Contractual Agreements and Temporary Layoffs

The parameters of temporary layoffs are set out in the Employment Standards Act (ESA). However, the ESA doesn’t give employers the right to enact them. The right to temporarily layoff an employee must be contractually stated, either in the employment contract or the collective bargaining agreement.

If an employee is temporarily laid off without a provision for this in their contract, the layoff would be considered a constructive dismissal and the employee would be entitled to seek damages for wrongful dismissal.

Wrongful dismissal charges may be avoided if the laid off employee is immediately recalled to their former position. Furthermore, some courts have found that employees who refuse to return to their position after a non-contractual layoff will be found to have failed in their duty to mitigate their damages.

If the power to perform temporary layoffs was not in written agreement at the time of hire and an employer wishes to pursue this option, they should approach their employee with a written proposal for a temporary layoff. It is possible that the employee will choose this over termination, especially since employees can usually collect Employment Insurance benefits during a layoff.

How Long Can Temporary Layoffs Last?

A temporary layoff can last up to 13 weeks in a consecutive 20-week period. However, if a layoff exceeds this 13-week period it will become a termination at which point the employee will be entitled to termination pay in lieu of notice with the first day of the layoff becoming the date of termination.

However, the ESA provides that a temporary layoff may be extended to as long as 35 weeks if:

  • The employee continues to receive substantial payments from the employer,
  • the employer continues to make payments for the benefit of the employee under a legitimate retirement or pension plan or a legitimate group or employee insurance plan,
  • the employee receives supplementary unemployment benefits,
  • the employee is employed elsewhere during the lay-off and would be entitled to receive supplementary unemployment benefits if that were not so,
  • the employer recalls the employee within the time approved by the Director, or
  • in the case of an employee who is not represented by a trade union, the employer recalls the employee within the time set out in an agreement between the employer and the employee; or

If an employee quits before a layoff is over they are not owed severance or termination packages but may still be entitled to accrued benefits such as vacation pay.

Temporary Layoff Legal Experts

Employers should always seek legal counsel before temporarily laying off an employee. To speak with an experienced employment lawyer about temporary layoffs or any other employment law matter, call us at 905-639-0999 or click here to book your consultation.

Employment law for hospitality workers in Canada

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Employment law for hospitality workers

Most of the Employment Standards Act (ESA) provisions apply equally to all employees. However, there are special provisions in the Act for workers in the hospitality industry which includes individuals who work in a hotel, motel, tourist resort, restaurant or bar.

Minimum Wage and Liquor servers

While the standard minimum wage for most workers in Ontario is $14 per hour, it is lower for workers classified as bartenders and liquor servers.

Who then, you might wonder, is considered a ‘bartender’ or a ‘liquor server’? According to the ESA, ‘bartenders’ and ‘liquor servers’ are employees who, “as a regular part of their employment, serve liquor directly to customers, guests, members or patrons in premises for which a licence or permit has been issued under the Liquor Licence Act and who regularly receive tips or other gratuities from their work.”

The ESA defines tips and gratuities as “a payment voluntarily made to or left for an employee by a customer of the employee’s employer in such circumstances that a reasonable person would be likely to infer that the customer intended or assumed that the payment would be kept by the employee or shared by the employee with other employees.”

As of 1 Jan. 2018, liquor servers are entitled to $12.20 per hour. This lower minimum wage is based on the fact that tipping is a well-entrenched practice in restaurants, bars and other places that serve alcohol. Because tips are an expected part of a restaurant worker’s income, without an enforceable clause limiting notice to minimum ESA requirements, they must generally be included in termination pay (in lieu of reasonable notice) even though the ESA does not officially recognize tips as part of an employee’s wage.

While employers can decide if tipping is allowed at their establishment, if they choose not to allow for tipping, they need to make this clear to customers. For more information concerning tips and gratuities, click here.

Overtime Pay

For individuals who work in a hotel, tourist resort, restaurant or bar, the rules of overtime pay are also different from most other employees under the ESA.

Instead of overtime starting after 44 hours in a single week, hospitality workers who receive room and board, work fewer than 24 weeks per year and whose employer is the owner of the hospitality establishment are only entitled to overtime pay after 50 hours of work in a single week.

Public Holidays

As a hospitality worker, you may have to work on a public holiday if it is normally a day you would work and you are not on vacation. However, if you do have to work on a public holiday, you will have to be given a separate day off with holiday pay or be paid public holiday pay plus a premium pay for the hours you work on the public holiday. Furthermore, employees who receive room and board from their employer and who are employed for 16 weeks or fewer in a year aren’t entitled to public holidays or public holiday pay.

If you are a hospitality worker and are concerned that your employment rights are not being honoured, the employment law team at KCY at LAW are here to help. Call 905-639-0999 or book your consultation online.

Wage Cuts, Layoffs and Covid-19 in Canada

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Wage Cuts, Layoffs and Covid-19

It is becoming a cliché to say that the economic freeze brought on by the coronavirus pandemic has been hard on Ontario businesses and employers. Mandatory closure of many businesses, social distancing and decreasing demand for many products and services is bringing many businesses to their knees.

Employers are facing herculean challenges in order to keep their businesses afloat during this pandemic and have only scarce and difficult options for doing so. Many employers simply do not have the cashflow to keep their staff employed at pre-pandemic levels and see their only option to avoid shutting down their business as laying off staff or reducing their wages. However, many employers are rightfully uncertain if they have the right to lay staff off or to reduce their wages.

Reducing Wages

Generally speaking, unilaterally choosing to reduce and employee’s wages would be considered constructive dismissal. If an employer independently decides to make a significant change to one of the fundamental terms of an employee’s contract – such as reducing their wages – the employee has the option to regard their contract as being terminated and sue for wrongful dismissal.

However, under the difficult circumstances brought on by COVID-19, employers can consult with their employees to see if they would be willing to take a temporary wage reduction so that they can continue to be employed instead of laid off or terminated if the business does not have the financial resources to continue paying them.

Laying Off Employees

Absent an enforceable clause giving your employer the right to temporarily lay off employees in your employment contract, most employers do not have the right to temporarily lay off their employees, even during the coronavirus pandemic. Generally speaking, a temporary layoff is considered a serious breach of contract that an employee may take as a constructive dismissal if the right to lay off an employee is not stated in their employment contract.

Takeaway for Employers

While it is possible that some employees might accept a temporary reduction in their wages or even a temporary layoff, employers should be weary of pursuing either option without a clause in their employee’s contract that gives them the explicit right to do so. It is difficult to say how a court would take into consideration the extreme circumstances of the pandemic in the event that an employee should bring forth a constructive dismissal suit, however, employers should know that the odds would not be in their favour.

Government Support

Fortunately, the Canadian Government is offering some support to businesses in the form of the Canada Emergency Wage Subsidy (CEWS) program as well as a 10% wage subsidy. CEWS covers 75% of an employee’s wages up to $847/week for all employers who have seen a loss of revenue of at least 15% in March and 30% in April and May. The 12-week program runs from March 15 – June 6. Additionally, CEWS eligible employers are entitled to a 100% refund for certain contributions to filings such as EI and CPP.

The temporary 10% wage subsidy is also a three-month program but it is for individuals, partnerships, non-profits, registered charities, Canadian-controlled private corporation that are eligible for the small business deduction. You can find more information about the wage-subsidy programs here.

If you have questions about your rights as an employer to lay off or reduce and employee’s wages in relation to the ongoing COVID-19 pandemic, call the employment law experts at KCY at LAW today: 905-639-0999 or book your consultation online.