Does An Employer Have the Right to Lay Their Employees Off?

By Brad Kielmann & Bridget Shebib

Many employers and employees alike are surprised to learn that an employer does not have an automatic right to lay an employee off. Further, even when the right to lay an employee off exists, the layoff can only be temporary, and must be executed in accordance with the Employment Standards Act, RSBC 1996 c 113 (the “ESA”) and the court decisions interpreting it.

Determining whether an employer has the right to lay their employee off, and whether they have done so in accordance with prescribed rules, will largely depend on the facts and circumstances of each case. However, we have attempted to answer some “frequently asked questions” regarding this topic below in an effort to provide our clients and the community with some preliminary information in relation to this issue.

When Will an Employer Have the Right to Lay Their Employee Off?

An employer’s right to lay their employee off will only exist:

(a) where an express term in the employment agreement gives the employer that right;

(b) by a well-known industry-wide practice (i.e., it is found to be an implied term of the employment agreement); or

(c) with the consent of the employee.¹

Importantly, if an employer lays an employee off without having the right to do so, this can be considered a “constructive dismissal,” or in other words, a termination of the employee’s employment. If the employee is deemed to be terminated, this can give rise to an obligation on the employer to pay severance.

How Long Can an Employer Lay an Employee Off For?

Even where an employer has the right to lay an employee off, they only have the right to do so temporarily. According to the ESA, a “temporary layoff” is a period of time wherein where an employee earns less than 50% of their regular weekly wages, regardless of whether they are still working, and where there is a plan that the employee will return to a regular work schedule.² Further, if either:

(a) the employee will not be returning to work; or

(b) the temporary layoff period extends beyond a prescribed length of time,

the ESA may deem that employee to have been terminated.

According to the ESA the prescribed period of time within which an employee must be called back to the job within (the “Recall Period”) to avoid the ESA deeming that layoff a termination depends on the circumstances. More specifically,

(a) if the employee is a member of a union and the collective agreement specifies the Recall Period, the employee will be deemed terminated if the layoff exceeds the Recall Period specified; and

(b) if the employee is not a member of a union, the employee will be deemed terminated if the layoff exceeds 13 weeks in any period of 20 consecutive weeks.

Can an Employer Extend the Recall Period?

Yes. The ESA also creates a mechanism by which an employer can apply for an extension of the Recall Period, (i.e., a “variance”) where “exceptional circumstances” exist. However, in order to extend the Recall Period via a variance, the employer is generally required to submit a joint application to the Employment Standards Branch (the “ESB”) with the employee at issue, and must have the application approved by the ESB before they can extend the Recall Period in compliance with the ESA.³

Can an Employee Refuse to Return to Work Once Recalled?

An employee’s refusal to report for work when recalled from a temporary layoff can constitute a “constructive resignation.” Further, where such a resignation occurs within the thirteen-week temporary layoff period the employer may not be obliged to pay the employee compensation for the length of their service.⁴

However, it is the employer’s responsibility to recall the employee and to use a certain level of diligence when doing so. More specifically, the case law sets out that:

(a) an employee has no obligation to contact an employer regarding a recall from a temporary layoff;⁵

(b) leaving a message on an answering machine is insufficient notice that the employee is being recalled;⁶ and

(c) the employee is entitled to sufficient notice of the recall. One to two days’ notice is not sufficient;⁷

In the event that the court believes the employer was ineffective at recalling the employee back to work, the temporary layoff may be considered a dismissal upon the expiration of the Recall Period.

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[1] British Columbia “Employment Standards: Definition (Week of Layoff) – Act Part 8 Section 62,” online: < https://www2.gov.bc.ca/gov/content/employment-business/employment-standards-advice/employment-standards/forms-resources/igm/esa-part-8-section-62>. See also, CLE BC, “Employment Standards in British Columbia: Annotated Legislation and Commentary,” §1.27: “Temporary Layoff” online: https://pm.cle.bc.ca/clebc-pm-web/manual/42865/book/view.do#/C/1605445.

[2] British Columbia “Employment Standards: Quitting, getting fired or laid off,” online: < https://www2.gov.bc.ca/gov/content/employment-business/employment-standards-advice/employment-standards/termination>.

[3] British Columbia “Employment Standards: Apply to extend a temporary layoff,” online: < Apply to extend a temporary layoff – Province of British Columbia (gov.bc.ca)>.

[4] Neylan, Re, 2002 CarswellBC 4317 at para 29 citing Re Wong, [1999] BCEST D80 (QL)

[5] Neylan, Re, 2002 CarswellBC 4317 at para 30 citing Re Evergreen Exhibitions Ltd., [1996] BCEST D 293.

[6] Neylan, Re, 2002 CarswellBC 4317 at para 32 citing Re Kant Holdings Ltd., [1997] BCEST D401.

[7] Neylan, Re, 2002 CarswellBC 4317 at para 32 citing Re Kant Holdings Ltd., [1997] BCEST D401.

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