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The six most common questions about temporary layoffs

Article co-written & researched by Tyler Anthony

Throughout 2020 many small and medium-sized companies have been faced with financial hardship, forcing them to explore options such as temporary layoffs, to ensure their business survives.  In the event you find yourself in a similar position, this blog answers six of the most common questions we get about the Alberta laws on temporary layoffs and recent changes made in response to COVID-19 (excluding employment governed by collective agreements).

Who has the authority to temporarily layoff employees?

Under section 62 of the Employment Standards Code, employers have the right to temporarily lay off employees. Temporary layoffs enable employers to dismiss employees for a period of time without being required to provide them reasonable notice or pay in lieu of notice, and reserves employers the right to recall the employees at any time during the temporary layoff period.

What do I need to include in the employee notices?

To remain compliant with Alberta law employers must provide employees with notice of the temporary layoff. Failure to include the required details in the notice could give employees the right to sue for constructive dismissal, which is why it’s imperative you include the following details in the notices you give:

  1. A clear statement highlighting that the layoff is temporary;
  2. The date in which the layoff will begin; and
  3. A copy of section 62, 63, and 64 of the Code.
How much notice am I required to provide?

Notice periods are determined based on the terms of employment. Anyone employed for less than two years is entitled to receive at least one week’s notice of their temporary layoff before it commences and employees who have worked for over two years are entitled to at least a two weeks notice.

How long can temporary layoffs last?

Prior to COVID-19 employers could temporarily layoff employees for a total of 60 days within a 120-day period. Anything beyond that time longer would result in the employee being deemed to be terminated unless:

  1. The employer paid the employee wages or an amount instead of wages during the layoff; or
  2. Made payments on behalf of the employee with regards to their pension or employee insurance plan (or similar plan).

In response to COVID-19, Ministerial Order (MO 2020-18) and Bill 24: the COVID-19 Pandemic Response Statutes Amendment Act, 2020 were enacted, increasing the maximum temporary layoff period to 180 consecutive days if the employee is laid off for reasons related to COVID19. This applies retroactively and includes any employees who had already been laid off as of June 18, 2020.

On the 181st day of a temporary layoff if the employee has not been recalled their employment is deemed to be terminated and they are entitled to termination pay.

How do I go about recalling employees?

To recall an employee from a temporary layoff, an employer must send the employee a recall notice in writing. The notice must state that the employee is required to return to work within seven days of receiving the letter, and failure to do so means they forfeit their right termination pay.

Can temporary layoffs turn into constructive dismissal claims?

We recommend including temporary layoff provisions in all employment contracts, including those you have with contractors. Contractors are a great resource for managing your workforce without the potential financial burden of paying severance, but you should still treat their employment contracts the same as other employees.  In some cases, the Courts have stated that temporarily laid-off employees have a right to sue their employer for constructive dismissal or wrongful termination, even though the Code allows for temporary layoffs if the employment contract excludes those provisions. If current employment contracts do not include temporary layoff provisions, be sure to give your employees ample notice and have them consent to it (if possible).

Hopefully, these answers are useful should you ever find yourself considering temporary layoffs. If we didn’t answer all your questions above, send them our way and one of our trusted professionals to discuss any additional questions you have.

Phone: 403-718-9877

Email: [email protected]

Written by:

Claudius is an experienced commercial lawyer who specializes in acquisitions, financing, and securities law in relation to corporate commercial law.

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