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Lay off and COVID-19
updated 3 years, 11 months ago
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My business is currently suffering due to loss of revenue and we are struggling to survive. If my business needs to shut down due to COVID – 19, can I lay off my employees?
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Under the Employment Standards Act, 2000 (the “ESA”), employers can temporarily layoff employees for a period of up to 13 weeks (in some cases this can be extended to 35 weeks). However, although temporary layoffs are contemplated in the ESA, an employer is not permitted to lay off an employee unless the contract of employment between the parties explicitly or implicitly gives the employer the authority to do so.
If an employer is struggling to operate its business due to COVID-19 (e.g. where remote work is not available and a significant portion of the staff are in self-isolation, or where the work environment becomes too high risk for employees), an employer may consider asking its employees to agree to a temporary layoff. An employee’s agreement must be obtained before this option will be available to employers.
It is important to note that if an employee does not agree to a temporary layoff, the employer may have to consider terminating the employee’s employment and providing them with their entitlements on dismissal. In addition, employers should be aware that if the layoff extends beyond the time limits specified by the ESA, the employee will be deemed to have been dismissed as of the first day of the layoff.
Please note: The government has introduced Canadian Emergency Wage Subsidy (CEWS) to provide financial support to employers to reduce or eliminate the need for layoffs or dismissals, even in cases where a business must temporarily cease operations. Employers should consider whether they qualify for the CEWS before proceeding with layoffs. This will not only assist employers to avoid the legal issues noted above but ensure they are able to return to regular operations as quickly as possible once the COVID-19 crisis has ended.
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