Can an employee be required to use vacation during a temporary shutdown?

What are employers’ options if worker has already used vacation time for the year?

Colin Gibson

Question: If an employer shuts down its operations for a short period of time, can it order employees to use some of their annual vacation entitlement for that period of time? What are the options if an employee has already used her vacation time for the year?

 

Answer: Employers have a general right to dictate when employees take vacation. In the unionized context, this right is subject to the terms of the collective agreement.

In the non-union context, management may schedule vacation time according to business needs, unless the employment agreement provides otherwise.

Provincial employment standards legislation requires that employers allow employees to take their vacation in periods of one or more consecutive weeks unless otherwise requested by the employee and agreed upon by the employer.

Employees are also required to take their vacation within 12 months of earning it, although an employer can request that employees take their vacation days before earning them. If an employer wishes to do so, it must explain the impact this will have on future vacation entitlements and obtain the employee’s approval.

Employers may accordingly require non-unionized employees to take vacation during a shutdown, provided the employees have vacation available and the shutdown is for a period of at least one consecutive week.

For employees who have exhausted their vacation entitlement, a shutdown will result in a temporary layoff. At common law, a temporary layoff will normally be considered a constructive dismissal, unless there is an express or implied term in the employment agreement that contemplates temporary layoffs from time to time.

Provincial employment standards legislation provides that employers may temporarily lay off employees. The allowable length of a temporary layoff differs throughout the jurisdictions.

However, because the common law does not provide for layoffs, courts have generally held that unless the employment agreement expressly or impliedly allows for a layoff, employment standards provisions regarding temporary layoffs do not apply.

In Collins v. Jim Pattison Industries Ltd., the court noted: “The [Employment Standards] Act does not grant all employers the statutory right to temporarily lay off employees, regardless of the terms of their employment contract. Rather than creating new rights, the act appears to be qualifying employment agreements in which the right to lay-off already exists. Therefore, unless the right to lay-off is otherwise found within the employment relationship, the above cited sections of the act are not relevant.”

The Alberta Court of the Queen’s Bench provided a different interpretation in Vrana v. Procor Ltd., finding that the temporary layoff provisions in the Alberta Employment Standards Code created an implied term in all employment agreements allowing employers to temporarily lay off employees per the terms of the code.

The case was overturned on appeal, but the Court of Appeal did not explicitly address the issue of whether the statute creates an implied term for temporary layoff, instead noting that the code requires all employers to give “fair notice” of a temporary layoff. 

Though the law is unsettled, most case law follows the Collins approach. If the right to impose a temporary layoff is not an express term of the employment agreement, it is still part of the employment relationship if the worker consents or if temporary layoffs are common practice in the workplace, industry or sector where the employer operates.

For more information, see:

Collins v. Jim Pattison Industries Ltd. (1995), 7 B.C.L.R. (3d) 13 (B.C. S.C.).

Vrana v. Procor Ltd., 2003 ABQB 98 (Alta. Q.B.).


Colin G.M. Gibson is a partner at Harris & Company in Vancouver. He can be reached at (604) 891-2212 or cgibson@harrisco.com.

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