Many BC employers will have issued temporary layoffs to employees with the start of BC's COVID-19 lock down in March. Soon after the start of the provincial lock down, the BC Government extended the temporary layoff period under the BC Employment Standards Act (ESA) from 13 weeks to 16 weeks for COVID-19 related layoffs. Therefore, for employees laid off by BC employers during the week of March 16th, the 16 week period will expire in less than 2 weeks on July 5th.
Employers should be aware that a COVID-19 layoff which extends beyond the 16 week temporary layoff period will result in a deemed termination, and therefore an obligation on the employer to payout ESA termination pay. Furthermore, for employers that have laid off 50 or more employees, this will trigger the ESA group termination pay provisions requiring the employer to pay each employee their regular termination pay based on their length of service, plus group termination pay (an additional 8 weeks per employee if between 50 to 100 employees are affected, 12 weeks per employee if 101 to 300 employees are affected, and 16 weeks if 301 or more employees are affected).
The liability for such termination pay could therefore be very significant. For example, if an employer has laid off 75 full time employees earning $15/hr. with 5 years' service, then each such employee would be entitled to 13 weeks termination pay (5 weeks regular termination pay + 8 weeks group termination pay). The total liability would therefore be in excess of half a million dollars:
(($15/hr. x 40 hrs.) x (5 weeks + 8 weeks)) x 75 employees = $585,000 in ESA termination pay
Although there is a potential exemption from paying termination pay in s. 65(1) (d) of the ESA where an employment contract "is impossible to perform due to an unforeseeable event or circumstance", we are concerned that this exemption will likely not apply to protect employers now that many BC businesses are able to reopen with the easing of COVID-19 restrictions.
Employers who continue to have employees on layoff, and especially those employers with 50 or more employees laid off, should therefore get legal advice on their situation as soon as possible. They should also consider recalling back to work as many employees as possible before the expiry of the 16 week temporary layoff period to avoid incurring substantial liabilities for termination pay.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
