When faced with challenges such as financial constraints or shortage of work, businesses may need to cut back on staff hours or reduce workforce. To help employers navigate such scenarios without losing skilled workers, employment standards legislation across Canada offers a provision for temporarily laying off employees.
A temporary layoff allows an employer to pause the employment relationship for a set period of time without terminating the employee. But the employer must call the employee back to work within that specified timeframe. Under Alberta's Employment Standards Code (ESC), the maximum duration of a temporary layoff is 90 days in a 120-day period.
In Alberta, layoff notices must be given to the employee in writing and must be provided to the employee before the layoff starts. Failure to do so will result in the layoff being invalidated.
The employee is considered terminated and is entitled to termination pay.
Whenever the employee is recalled within the statutory and contractual layoff time period, the employee must return to work. Failure to return to work may be considered a resignation. Thus, the employee may lose their termination notice entitlements and severance pay (if any) under the employment standards regime or common law. Under Alberta’s ESC, the employee must return within seven (7) days of being served with a written recall notice.
In Alberta, employers must serve the employee with a written recall notice. This can be done by ordinary mail, recorded mail to the employee’s address provided or by the employee’s email address.
Before laying off an employee in Alberta, the employer must provide notice of temporary layoff. A valid notice must be in writing, say that it’s a temporary layoff notice, and its effective date. It must also include sections 62-64 of the ESC.
Laying off employees in Alberta without providing proper notice may expose your business to constructive dismissal claims.
An employer in Alberta can lay off an employee if:
Although the ESC provides a provision for temporary layoffs, it does not mean employers can enact temporary layoffs arbitrarily. It is a good practice to include a layoff clause in your employment contracts. Laying off employees without their consent or a contract clause allowing for temporary layoffs may be considered a constructive dismissal. In this case, you’ll have to pay the employee termination pay and potentially other damages.
At the same time, an employer who implements a temporary layoff to delay providing termination payments or without the intention to recall the employee risks being subjected to additional moral or punitive damages in a constructive dismissal litigation.
Developing well-drafted employment contracts that clearly allow for temporary layoffs will help avoid liability for constructive dismissal. If your work contracts do not permit temporary layoffs, get the employee’s consent before laying them off. If an employer is unable to get consent from the employee, the employer should keep in mind the risks of temporarily laying off the employee.
While some courts in Alberta have also held that the ESC permits an employer to temporarily lay off an employee without a collective agreement or contract allowing layoff, the employee still has the right to sue for constructive or wrongful dismissal if laid off in such circumstances.
Temporary layoffs are a useful tool for employers to help weather financial setbacks or other unforeseen circumstances without losing experienced staff. But it’s critical to understand the legal requirements for temporary layoffs in Alberta to ensure compliance with the ESC and avoid litigation.
Whether you need help implementing job contracts with temporary layoff clauses or need clarification on how to temporarily lay off employees, our HR experts can help you. Call us today at 1(833) 247-3652.
