Photo by Brusk Dede on Unsplash
Much of the Ontario, where I practise law, was laid off this spring as COVID-19 came through the province. (According to Statistics Canada, 20% of Canadian businesses had laid off 80% or more of their staff by the end of April, 2020.) Shortly afterward, the limitation to recall employees from a layoff under the Employment Standards Act was suspended until September 4, 2020—and then extended until January 2, 2021—to recall their employees from layoffs, or these layoffs will become terminations, which require the employers to provide termination pay.
As of the time of this publication, businesses are struggling to reopen without the added cost of providing their employees with termination pay. So, barring another extension, what does that mean for employees and employers come the new year?
A layoff is when the employee is off of work on a short-term basis, with the idea that they will return to their original job. That means returning to the same duties and the same compensation.
Recently, I’ve spoken with a number of employees who have been offered a recall to work subject to reduced hours, reduced wages or to additional duties assigned without any additional compensation.
The employer doesn’t have the right to force these changes onto the employee, although the employee can agree to accept these changes if they want to. As noted above, the concept is that employee will return to the same job.
However, I’ve also spoken with employers who say they are only able to offer employees a return to work if costs are reduced by cutting wages, cutting hours or enlarging job descriptions. In most of these cases, the reality is that the business isn’t viable unless staffing costs are reduced, and if an agreement can’t be reached with employees, the business will simply close.
This often creates a difficult situation based on the employer and the employee both being in a difficult financial spot. Employees with an income reduced to what was offered by the CERB will be eager to return to normal earnings. Employers coming out of a period of reduced, or even zero, revenue will be looking at whether the business can return to being viable.
There’s no perfect answer on how to bring employees back from a layoff, by September 4, 2020, where the business hasn’t restored its sales volume. My advice to employers has often been that if you can afford to bring back your employees at their regular hours, regular wages and regular duties, then that’s what you should do. However, if you can’t afford to bring back your employees on this basis, be straight with them and let them know you can’t offer full-time right now, or that the business is likely to close. Some employees will elect to come back on these reduced terms while others will simply elect not to return unless they can come back to the same deal that they had before the layoff.
There are also a number of government incentives to help employers to cover wages as staff return from layoffs and might provide the answer for some employers.
For now, employers can leave employees on a layoff without it being considered a termination under the Employment Standards Act until January 2, 2021. But, without a further extension, these layoffs will become terminations triggering termination entitlements.
The next few months will contain some big decisions for many business owners.
MORE ABOUT COVID-19:
Can I tell the bank it’s not viable for me to pay the full amount on my loans? And no, I can’t afford a deferral, I need a suspension if not a annulment. Best would be a write down to my ability to pay. We are all in this together, right? Why are only debt holders being protected?
Response from the MoneySense editorial team:
Hi Greg, thank you for the question.
Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.
Very good information in this article. I was laid off due to COVID on 25 March and am hoping to get back to work. I would much rather work and go on EI.
What do you do in the mean time? Find another jobwhich isn;t easy), or wait for that termination pay? You have to be truthful to Ei regarding availabliity. In the end I think the new job would be better. At least the person is working. What do you think?
Hopefully the pandemic will be easing off and a vaccine near. This is a well written article on the effects of the pandemic on people and the economy. Employers face specific guidelines and employees just want to go back to work. But it’s not that easy because of Covid. Safety should always be priority but people are struggling. Mistershaka.com