My employer has laid me off because of COVID-19 but kept my benefits active. As there is a lasting impact on our business, I don’t expect to be rehired until maybe October, and that may not be permanent. At what point are they obligated to pay severance, and is there a way to force the issue?
The First Answer
Ryan Edmonds, principal lawyer, Ryan Edmonds Workplace Counsel, Toronto
Before the pandemic, a non-unionized employer needed consent to enact a temporary layoff. If consent was given, whether express or implied, employment standards legislation set a time limit for recalling the employee otherwise severance had to be paid. If consent was not given, the employee could seek severance pay by treating the employer’s actions as a permanent termination; this is called a constructive dismissal.
Given the unique nature of the pandemic, it’s now an open question whether the constructive dismissal analysis still applies. Between the practical challenges of becoming unemployed at the worst possible time, the risk of asserting such a claim in the face of legal uncertainty and the fact that courts make the unsuccessful party pay a large portion of the winner’s legal fees, many Canadians have decided that having some possibility of employment is better than none at all.
That said, unless you are based in Ontario, you should still be entitled to severance if you are not recalled within the statutory time limit, which varies depending on province and jurisdiction. As the pandemic drags on though, some governments are passing laws to extend the time limit for temporary layoffs so that struggling employers aren’t forced to pay severance when they’re most vulnerable.
Ontario is a special case, however. If you are non-unionized and laid off due to COVID-19, a new regulation passed in June means that your layoff is now an “infectious disease leave” which can last until six weeks after the state of emergency is lifted. As a result, there is no longer a clock that you can wait out until severance must be paid. While you could try to force the issue by claiming constructive dismissal at common law, the caveats above still apply.
This is a complex subject that we have only scratched the surface of. Anyone temporarily laid off due to COVID-19 should make sure to get proper legal advice from an employment lawyer before trying to assert a right to severance, especially if they are in Ontario.
The Second Answer
Melissa Rico, partner, Carbert Waite LLP, Calgary, A.B.
It sounds as though your employer has placed you on a temporary layoff. One of the purposes of a temporary layoff is to allow the employment relationship to continue during lulls in business. Each of the provinces has employment legislation that provides for temporary layoffs and the rules that need to be followed by the employer. Similarly, the Canada Labour Code is the federal legislation that addresses temporary layoffs. According to these laws, you would be entitled to severance when the maximum time frame stipulated for a temporary layoff is reached. It is important to note that during COVID-19, many of the provinces have enacted legislation extending the maximum time frame for a temporary layoff. For example, in Alberta, the temporary layoff period has been extended to 180 consecutive days, if the cause of the layoff was due to COVID-19.
You could possibly force the issue of severance with your employer. Although the applicable employment legislation gives employers the statutory right to lay you off, that does not mean that this is allowed in all situations. You should review your employment contract to determine if there is a specific provision regarding temporary layoffs. If your contract does not include a clause about temporary layoffs, you may be able to claim you have been constructively dismissed by your employer. Constructive dismissal is where you claim for severance as a result of your employer making decisions to significantly change terms of your employment contract without your consent. Previous court cases have decided that where an employer imposes a layoff without it being agreed upon in the employment contract, this is constructive dismissal, resulting in severance being paid to the employee.
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