Pandemic layoff extension considered constructive dismissal

Employer said temporary layoff would last maximum of 24 weeks, so worker didn't consent when Vancouver company wanted to extend it further

Pandemic layoff extension considered constructive dismissal

A British Columbia worker who was temporarily laid off during the pandemic is entitled to 11 months’ notice of termination, the B.C. Supreme Court has ruled.

Ian Andrews, 61, was hired in February 2006 by Allnorth Consultants, a multi-disciplinary engineering and construction services consulting company based in Vancouver, to be a senior mechanical designer. The position involved designing conveyors and material handling systems for pulp mills. He received no complaints about his job performance.

On July 7, 2020, Allnorth sent a letter to Andrews indicating that the COVID-19 pandemic had significantly impacted its business. The decline in the company’s workload made it necessary to reduce staff, so it was placing Andrews on temporary layoff, effective the next day. The letter stated that “this is considered to be a temporary layoff and may be up to 24 weeks per British Columbia’s Employment Standards” and added that if there were any legislative changes, those changes could be “automatically exercised.”

One week later, Andrews signed the letter agreeing to the temporary layoff.

Andrews remained out of work for about one month until he found a part-time job with no benefits that was intended to tide him over until he was recalled back to work with Allnorth. On Sept. 14, the HR business partner for Allnorth emailed Andrews to update him on the situation. She said that the company had only been able to partially resume operations, so it was applying to the B.C. Employment Standards Branch to extend the temporary layoff through a variance to the province’s Employment Standards Act, to Dec. 31.

She noted that under the law, the temporary layoff could only last a maximum of 13 weeks out of a period of 20 consecutive weeks. Without the variance, Allnorth would have to terminate the employment of employees on temporary layoff if it couldn’t recall them before the 13-week period expired. Those employees “may be entitled to compensation for length of service,” the HR business partner added.

Worker didn’t agree to layoff extension

According to Andrews, on Sept. 16 he told a manager that he wasn’t prepared to consent to the variance and asked when work might be forthcoming. The manager replied that it might not be until “the late spring or early summer of 2021.” According to the manager, he said that if work came in they would recall him as soon as possible, but there was no definite work line up that he could mention at that time and Allnorth couldn’t commit to a return-to-work date.

The Director of the B.C. Employment Standards Branch approved Allnorth’s variance application to extend the temporary layoff to Dec. 31. The company informed Andrews of the layoff extension, but Andrews didn’t agree to it. One month later, on Nov. 2, he filed a civil claim for wrongful dismissal damages.

Andrews claimed that Allnorth sought to unilaterally extend and alter the temporary layoff to which he had originally agreed. He argued that a temporary layoff was a fundamental breach of the employment contract that amounted to constructive dismissal, but he had agreed to the original layoff due to the circumstances around the pandemic. The variance application didn’t apply to his common law agreement for the 24-week layoff, Andrews said.

The worker didn’t agree with the variance application, so there was no employment agreement that extended the temporary layoff.

Allnorth argued that Andrews consented to the temporary layoff and the legal variance that it was granted was part of the layoff to which he agreed. It noted that the 24 weeks to which Andrews had originally agreed didn’t end until Dec. 22. However, Andrews didn’t wait to see if the layoff would actually continue until then. By filing his application in early November during the original layoff period, Andrews repudiated the employment contract, said Allnorth.

The court noted that it had been established that “the right to lay off an employee must be found within the employment relationship, and in the absence of a contractual provision, there is no general right of an employer to temporarily lay off its employees.” It conceded that employers may have to reduce staff during periods of economic downturn such as the pandemic, but employees were still entitled to reasonable notice or pay in lieu thereof without contractual arrangements to the contrary.

The court found that Allnorth’s initial layoff letter to Andrews was incorrect — B.C. employment standards did not allow 24 weeks of layoff. The HR business partner had the right limits to a temporary layoff, which was 13 weeks out of 20 consecutive weeks. The confusion probably came from the fact that the B.C. government amended employment standards early in the pandemic to allow for layoffs related to the “COVID-19 emergency” of up to 24 weeks in any period of 28 consecutive weeks. However, the restriction for such layoffs was that they had to begin before June 1, 2020. Since Andrews was laid off on July 7, the regular standard for layoffs applied, said the court.

Andrews agreed to the 24-week layoff, but he didn’t agree to the extension. As a result, there was no employment agreement that extended the temporary layoff to Dec. 31, 2020, or the spring of 2021, said the court, adding that Andrews was terminated on Sept. 16, 2020, when he indicated that he didn’t consent to the variance application for the extension of the layoff.

The court determined that, given his 14 years of service, qualifications, experience, and relatively advanced age, Andrews was entitled to 14 months’ notice. The court reduced the period to 11 months due to the possibility that Andrews could find full-time employment before the end of the notice period. In addition, although Andrews had been unable to find permanent, full-time employment, the part-time work he found indicated that he made reasonable efforts to mitigate his losses, the court said.

The income Andrews lost during the 11-month notice period amounted to more than $90,000. After the court subtracted the income he earned with the part-time job, Allnorth was ordered to pay Andres $47,373. The court declined to discount the damages to account for CERB payments Andrews received because it was likely he would have to pay them back after winning compensation for his lost wages.

For more information, see:

  • Andrews v. Allnorth Consultants Limited, 2021 BCSC 1246 (B.C. S.C.).

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