Employers affected by the economic downturn of COVID-19 may be using temporary layoffs to manage their workforce during their business slowdown. Once businesses begin to recover from COVID-19, those affected employers will need to consider when and how to properly recall their workers from layoff without triggering a deemed termination of employment. The following are some considerations for employers when dealing with worker recalls.
How long can a layoff last?
Under the Employment Standards Act, 2000 (Ontario) (“ESA”), an employer can temporarily lay off employees for less than 13 weeks in any period of 20 consecutive weeks, or less than 35 weeks in any period of 52 consecutive weeks. If an employer exceeds the temporary layoff period, then the employer may be deemed to have terminated the employee’s employment, in which case the employer must provide notice and statutory severance if applicable. Employers not wanting to end up with a deemed termination situation must take care to ensure that the employees are recalled before their respective deemed termination date has been reached.
What if an employee fails to return to work after being recalled to work?
Where an employee is recalled to work within the prescribed period of time, the employee is required to return to work “within a reasonable time.” Failure to do so may be considered job abandonment, and the employee may lose the right to termination pay.
What if an employer wishes to extend the temporary layoff period?
The ESA provides employers with several options that would permit the extension of a temporary layoff period for 13 weeks or beyond. For example, employers may extend a layoff beyond the time prescribed if: (a) they have provided laid off employees with certain prescribed benefits or payments throughout the entire layoff period; (b) have a recall date approved by the Director of Employment Standards; or (c) have a written agreement with the employee with respect to a recall date. For a layoff of up to but not reaching 13 weeks, employers are not subject to such requirements.
In other words, if an employer has fulfilled the obligations set out above, the employer may be permitted to continue the temporary layoff for up to 35 weeks in any period of 52 consecutive weeks without triggering a deemed termination of employment.
To more fully discuss how to extend a temporary layoff during COVID-19 without triggering a deemed termination of employment, please consult with any member of our Dentons’ Employment and Labour group.
Can a layoff ever exceed 35 weeks in a 52 consecutive week period?
Employees (more commonly unionized employees) may have contractual recall rights allowing their layoff to exceed the statutory 35-week limit. At 35 weeks of layoff, such an employee may choose to either retain their recall rights, or instead give up their recall rights and receive their termination entitlements immediately. If the employee chooses to retain their recall rights, the layoff period will continue beyond 35 weeks. For example, if an employee has a right to recall within 45 weeks in their collective agreement, at 35 weeks they will elect to retain their recall rights up to 45 weeks or receive their termination entitlements.
If a unionized employee chooses to keep his or her recall rights or fails to make a choice, the employer and the union must attempt to negotiate, in good faith, an arrangement for holding the employee’s termination entitlements in trust. If negotiations with the union are unsuccessful and the union advises both the Director of Employment Standards and the employer in writing that negotiation efforts have failed, the employer must pay the employee’s termination entitlements to the Director in trust. If the employer and the union do not attempt to negotiate or the union does not notify the Director of failed attempts to negotiate, an employer does not have an obligation to pay an employee’s termination entitlements to the Director in trust.
If a non-unionized employee who has a right to be recalled under their employment contract chooses to keep his or her recall rights or fails to make a choice, the employer must pay his or her termination entitlements to the Director of Employment Standards, in trust.
Employers may write to the Director of Employment Standards by mail or fax at the following address:
Director of Employment Standards
400 University Avenue, 9th Floor
Toronto, ON M7A 1T7