The COVID-19 pandemic served as a stark reminder about the practical need for employers to be able to quickly implement changes to the workforce in order to reduce costs, and try to save jobs. Temporary layoffs – moving employees to inactive status while keeping them employed – effectively do just that. Although they are subject to certain requirements which will be set out below, temporary layoffs are an important and generally permissible tool for employers to use.

During a temporary layoff, the employment relationship is treated as ongoing, with the understanding that the employee will be recalled to work if possible. As a result, employees enjoy a certain level of protection while on a temporary layoff, as they often continue to receive benefits, can apply for Employment Insurance (EI) and can even search for another job while laid off. If things work out for the employer, the employees eventually return to work; if things do not work out for the employer, then the employees are terminated, and receive their corresponding entitlements.

It is important that temporary layoffs be conducted in compliance with applicable laws, as otherwise they will be treated as a termination of employment, and trigger employer liability under applicable employment standards or labour standards legislation (employment standards), contract, or common law (or, in Québec, civil law). In addition, if an employer is implementing layoffs in relation to government imposed requirements (for example, COVID-19), there may be different requirements that apply. Employers should ensure they understand the maximum amount of time a layoff can be in place before becoming a deemed termination, as well as the requirements for notifying employees of layoffs and recalling employees back to work.

This Toolkit will review the topics above, set out best practices for handling temporary layoffs, provide strategies to mitigate risks associated with temporary layoffs, and then summarize jurisdiction specific requirements. Note that this information is current as at the time of publication.

If you would like more information about the Toolkit, please contact Catherine Coulter, Arianne Bouchard, Victoria Merritt, Larysa Workewych, Maggie Sullivan, Jenny Wang, or another member of the Employment and Labour team.

Download the Temporary Layoff Employer Toolkit (Canada)