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Further Extension of Temporary Layoff Period for Federally Regulated Employers

On November 9, 2020, the federal government announced a further temporary extension to permitted layoff periods for federally regulated private-sector employees.

Background

In June of 2020, the federal government extended the time periods for layoffs under the Canada Labour Standards Regulations to allow federally regulated private-sector employers more time to recall laid-off employees. Prior to these changes, such employers could only temporarily layoff their employees for up to three months if no notice with a recall date was provided, or for a period of up to six months if they provided a notice with an expected recall date, before the layoff became a termination of employment. The June amendments temporarily extended the permitted layoff time periods as follows:

  • For employees laid off prior to March 31, 2020, the time period was extended by six months or to December 30, 2020, whichever occurs first; and
  • For employees laid off between March 31, 2020, and September 30, 2020, the time period was extended until December 30, 2020, unless a later recall date was provided in a written notice at the time of the layoff.

November 9, 2020 Extension

With the most recent amendments, the permitted layoff periods are temporarily extended as follows:

  • If an employee is laid off for a period of 3 months or less:
    • before March 31, 2020, the time is extended by 9 months after the day on which it would otherwise end, meaning that employers would have up to 12 months to recall the employee before the layoff is deemed to be a termination of employment; and
    • for the period between March 31, 2020, and December 31, 2020, the time is extended and the employer has until March 31, 2021, to recall the employee before the layoff is deemed to be a termination of employment.
  • If an employee is laid off with an expected recall date or fixed period:
    • prior to March 31, 2020, the date specified in the written notice will be extended by 9 months or to March 31, 2021, whichever is earlier and the employer would have up to that period or date to recall the employee before the layoff is deemed to be a termination of employment; and
    • during the period between March 31, 2020 and December 31, 2020, the term of the layoff is extended and the employer has until March 31, 2021, to recall the employee before the layoff is deemed to be a termination of employment, unless a later recall date or fixed period was provided in a written notice.

The federal government has recommended that employers who intend to use this temporary extension inform their employees as soon as possible by providing them with a new written notice with the new recall date.

Note that employers can recall their employees at any time prior to the expiry of the extended layoff period. If an employer decides to terminate an employee’s employment or if an employer fails to recall the laid off employee prior to the expiry of the layoff period, the employer will have to provide the employee with his or her termination entitlements under the Canada Labour Code, which may include termination pay and severance pay. Note that the time that an employee is on layoff counts towards his or her length of service with the employer, which will be relevant to calculating termination entitlements under the Canada Labour Code. Depending on the circumstances, the employee may also be entitled to common law reasonable notice of termination.

Extension is Not Retroactive

These extensions do not apply retroactively. Employers cannot take advantage of this extension for employees terminated prior to June 22, 2020.

Exclusions

The temporary extension of the layoff periods does not apply to employees who are:

  • covered by a collective agreement that contains recall rights and/or a minimum work guarantee;
  • on strike or a lock out;
  • receiving employer payments (e.g. payment for retention purposes);
  • receiving employer benefits (e.g. pension plan or insurance plan);
  • receiving or eligible for supplementary unemployment benefits; and
  • terminated prior to the coming into force of these changes.

Extension is Temporary

In its announcement, the federal government stated that these are temporary changes and the extension provisions will not apply to layoffs occurring after December 31, 2020.

The federal government did not provide this warning in its June announcements (here and here), so it may be indicating that this will be employers’ last chance to effect layoffs which will qualify for the COVID-19 related extensions to permitted layoffs.

If you have any questions about how this extension may impact your business, please contact any member of the Lawson Lundell Labour, Employment & Human Rights Group.

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Lawson Lundell's Labour and Employment Law Blog provides updates on the most recent legal developments impacting the Canadian workplace and offers practical tips for employers. We cover a range of topics, including labour relations, employment law, collective bargaining, human rights, employment standards, employment equity, workers' compensation, business immigration, privacy, occupational health and safety and pensions and employee benefits. 

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