Returning to work after a layoff due to COVID-19

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:

• Will the average home insurance cost go up because of COVID-19?
• Where to find and apply for COVID-19 financial relief
• Managing your mortgage during COVID-19
• What should retirees do with their investments amid COVID-19

About Scott Hawryliw

Scott Hawryliw practises civil litigation law as a partner at Stewart Esten LLP in Barrie, Ont., with an emphasis on wills and estates, employment law, real estate disputes and general commercial litigation.

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