Extension of Temporary Lay-offs for Federal Workers

Summary#

These final regulations — Regulations Amending the Canada Labour Standards Regulations (COVID-19), No 2 — extend how long federally regulated employers can keep workers on temporary lay-off before that lay-off becomes a termination. Most of the changes came into force when the regulations were registered; one technical part comes into force on April 1, 2021.

What it does#

• For employees laid off before March 31, 2020, the allowable temporary lay-off period is extended so it can last up to nine months, or until March 31, 2021, whichever happens first.
• For employees whose lay-offs begin between March 31, 2020 and December 31, 2020, the allowable lay-off period is extended to March 31, 2021.
• The rules clarify how written recall dates in employer notices interact with these new time limits.
• The changes do not apply to employees covered by a collective agreement that already contains recall rights.
• The regulations do not change employees’ rights to termination pay, severance pay or vacation pay if their employment is actually ended; time spent on lay-off still counts toward those calculations.
• Most of the amendments took effect on registration of the regulations; one subsection explicitly comes into force on April 1, 2021.

Who's affected#

• Employers and employees in the federally regulated private sector (for example in banking, telecommunications, broadcasting, and inter-provincial or international transportation). This sector covers about 955,000 employees and 18,500 employers.
• Small federally regulated employers who were concerned about having to pay large lump-sum termination and severance amounts while revenues were low.
• Unions and employees who would prefer to receive termination and severance pay sooner may also be affected.
• These rules do not apply to workers covered by collective agreements with recall rights, and they do not apply to lay-offs that begin after December 31, 2020.

Why it matters#

• The change delays when a temporary lay-off becomes a permanent termination. That gives employers more time to bring workers back as business recovers.
• For employers, this can reduce immediate cash demands for termination and severance payments and may lower the risk of bankruptcies. The government estimated examples such as an average severance/termination cost of about $3,613 per employee (one-year tenure at an average weekly wage of $1,204) and potential employer liabilities of about $36,130 for 10 employees, $180,649 for 50, and $361,300 for 100.
• For workers, it improves the chance of being recalled and keeps lay-off time counting toward length-of-service entitlements. But it also means some people who wanted their severance sooner could see those payments delayed.
• The measure is temporary and targeted at pandemic-related lay-offs; it does not change long-term entitlements under the Canada Labour Code.