Employment Contracts 101: Temporary Layoff Clauses

The ability to temporarily lay off an employee is not generally top of mind when an employer is hiring a new employee. Consequently, temporary layoff clauses are often overlooked or missed all together when drafting employment contracts.

The British Columbia Employment Standards Act (“ESA”) has a provision which at first glance seems to allow for employers to temporarily lay off employees; however, it is not quite as straightforward as one might think. The ESA only allows employers to temporarily lay off employees in three circumstances:

  1. The layoff is part of an employment contract;
  2. The layoff is in an industry where temporary layoffs are standard industry-wide practice; or
  3. The employee agrees to the layoff.

Therefore, unless layoffs are a normal part of the industry, temporary layoffs are only permitted if the right to a layoff is contained within the employee’s employment contract, or the employer obtains the consent of the employee at a later date. The simplest way to achieve the former is to include a provision allowing for temporary layoff in accordance with the ESA in the employee’s employment contract when they commence employment.

A temporary layoff may last for up to 13 weeks in any period of 20 weeks. However, if an employer does not obtain the employee’s consent or the layoff period exceeds 13 weeks in a 20-week period, the employee’s employment will be deemed to have terminated, and the employee is entitlement compensation for the termination of employment. Given this, it is important to ensure that the employment agreement contain a provision entitling an employer to temporarily layoff an employee as provided by the ESA.

If you or your organization are considering temporarily laying off employees and would like to learn more, please reach out to Claire MacLeod at [email protected] or Leah Sorge at [email protected].

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