COVID-19 temporary layoff extensions

Summary#

These are final amendments to the Canada Labour Standards Regulations that temporarily let federally regulated employers keep workers on layoff for longer without that layoff being treated as a termination. The changes came into force when the regulations were registered (June 22, 2020), with one technical subsection set to come into force on December 31, 2020.

What it does#

• Extends the “three months or less” layoff period by six months for layoffs that began before March 31, 2020.
• For layoffs that begin between March 31, 2020 and September 30, 2020, the allowable layoff period is extended until December 30, 2020.
• Extends fixed recall dates that an employer gave in writing by six months, or to December 30, 2020, whichever comes first, for layoffs before March 31, 2020; and to December 30, 2020 for layoffs between March 31, 2020 and September 30, 2020.
• Clarifies that time spent on layoff continues to count toward an employee’s continuity of employment. If an employer later terminates employment, the employee still has the same rights to termination pay, severance pay and vacation pay under the Canada Labour Code.
• Does not apply to employees whose employment was already terminated before these rules came into force, nor to employees covered by a collective agreement that already contains recall rights.
• Main amendments are in force on registration (June 22, 2020); one repeal provision comes into force on December 31, 2020.

Who's affected#

• Employers and employees in the federally regulated private sector — for example, businesses in banking, telecommunications, broadcasting, and inter‑provincial and international transportation, as well as some federal Crown corporations and certain activities on First Nations reserves.
• The federal sector covered includes about 955,000 employees working for roughly 17,700 employers (figures cited in the regulatory analysis).
• Employees covered by collective agreements with recall rights are not affected by these extensions.
• It does not change rules that apply in provincially regulated workplaces.

Why it matters#

• The change delays when employers must treat long layoffs as permanent terminations. That postpones the need to pay termination and severance amounts immediately. It can reduce the short-term cash burden on struggling employers and lower the risk that businesses will fail while waiting for the economy to recover.
• For employees, the rule keeps the employment relationship alive longer and preserves the chance of being recalled to work. Time on layoff still counts toward years of service, so final payouts would include that service if a later termination occurs.
• The government argued this could reduce claims under the Wage Earner Protection Program (WEPP) (maximum payment cited as $6,798.57 in 2020) and ease inspection and benefit costs.
• The regulatory statement used examples to show the scale of potential employer obligations under normal termination rules (for context, the average weekly wage cited was $1,204, and a rough employer cost example for a business with 100 employees was $361,300). These examples help explain why delaying deemed terminations mattered during the COVID‑19 economic downturn.