Temporary Extension of Layoff Period Offers Relief

People working

The temporary layoff periods in the Canada Labour Code applicable to federally regulated employers have recently been extended.

The objective of these recent changes is to avoid the termination of employment resulting from the COVID-19 pandemic, by giving employers more time to recall employees whose employment would otherwise have been terminated due to the duration of the lay-off.

Further, the Government of Canada has recognized that the second wave of COVID-19 is underway and cases are increasing. This could lead to additional layoffs if business restrictions are reintroduced.

If an employer does not recall an employee to return to work within the temporary layoff period under the Canada Labour Code, the employee can be deemed terminated, and the employer can be liable for severance, termination pay, and other amounts owing under the legislation. As a result, many employers will want to avoid deemed terminations where possible.

How is the temporary layoff extension applied?

  • In June 2020, the allowable temporary layoff time was extended to six months.  This new change extends the temporary layoff period by nine months or to March 31, 2021, depending on the dates of the layoff.
  • These new amendments also extend the period of temporary layoff if the employer communicated to the employee in writing at or before the time of layoff that they would be recalled within a fixed period or on a fixed date. Depending on the dates that the layoff occurred and the fixed date or period the employee was to be recalled, the temporary layoff period could be extended by nine months or to March 31, 2021.

What does this extension mean for employers?

This extension provides more time for federally regulated employers to operate with a reduced workforce in order to keep their doors open in the short and long term. It also saves them having to permanently terminate valuable employees and avoid costs related to termination at a time when cash flow may be less than optimal.

Read the full update from the Government of Canada here.

For specific advice regarding how the temporary layoff period of your employees have been affected by these important changes, please contact any member of AHBL’s Labour and Employment Group. 

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