Temporary layoffs are a strategic choice for employers who are restructuring, experiencing financial hardships, or participating in seasonal work.

Employers, however, must ensure they are following the proper procedures and legislation when it comes to temporary layoffs. Failure to do so may result in claims of constructive dismissal and other legal trouble.

What is a Temporary Layoff?

A temporary layoff is when an employer puts an employee’s employment on hold. They will no longer be performing any work or earning wages; however, the employee is expected to return to work at a later date. Typically, an employee who experiences a 50% reduction in their average weekly wages will be considered laid off. Temporary layoffs can last up to 13 weeks in any 20 consecutive week period.

Employer Obligations

Employers who temporarily lay off an employee continue to have obligations to that employee. The employer must have a plan and expectation that the employee will return after the layoff. The employer must also continue any entitlements or contributions to the employee’s benefits.  It is best practice for the employer to maintain contact with the employee throughout the layoff period so any changes to the layoff period can be communicated efficiently.

Risk of Constructive Dismissal

Employers should err on the side of caution when temporarily laying off employees. If the employment contract does not allow for a temporary layoff, the employee does not consent to the layoff or temporary layoffs are not standard in the industry (e.g., construction, forestry, etc.), a temporary layoff is likely to result in a claim of constructive dismissal by the employee. Other factors that could result in constructive dismissals are if an employer fails to pay the employee’s benefits; or if an employer makes fundamental changes to the employment agreement without the employee’s consent, such as changing the employee’s position or wage upon their return to work. Furthermore, if the layoff extends greater than the 13 weeks in a 20 consecutive week period, the employee’s employment is deemed wrongfully terminated.

Navigating the complexities of temporary layoffs and constructive dismissal requires careful consideration to prevent liability or risks to the employer. Contact our Workplace Law team to assist you in making sure any temporary layoff is done correctly and is properly documented.