In today’s job market, being laid off can be a frightening experience due to uncertainty of the future. Whether due to economic downturns, company restructuring, or unforeseen circumstances, being laid off can have immense financial and psychological implications. However, it is important to keep in mind that as an employee in Canada, you have rights and protections in place to help you through this challenging time. In this blog, we will explore your rights as an employee if you find yourself facing a layoff in Canada.
Notice Periods and Pay in Lieu
When an employee is facing a layoff, one of the primary concerns is severance pay and the notice period. Depending on various factors, when an employer terminates your employment without cause, you are entitled to either notice of termination, pay in lieu of notice, or a combination of both. The notice period required is determined by several factors, including length of employment, position held, and specific provincial/territorial regulations. Generally, employees who have been employed at a company for more than three months are entitled to notice or pay in lieu of notice upon termination.
Severance Pay
Severance pay is a one-time payment that is separate from regular wages and is intended to compensate employees for the loss of their job. The length of employment, the cause of termination, and any applicable collective or contractual agreements are some of the variables that may affect the amount of severance pay.
If an employer terminates an employee’s employment, the employer must provide the employee who has completed at least 12 consecutive months of continuous employment with severance pay. Employees who have 12 consecutive months of employment that are subject to a lay-off or dismissal due to lack of work or the end of a work function that resulted in wrongful termination of employment are entitled to severance pay.
Severance pay is the greater of the following:
- Two (2) days’ wages, at the employee’s regular rate of wages, for each full year that an employee has worked for an employer before they were terminated, or
- Five (5) days’ wages at the employee’s regular rate of wages
In some cases, severance pay is required by employment standards legislation. For example, employees with at least five years of service who are terminated due to permanent discontinuance of all or part of an employer’s business are entitled to severance pay equivalent to one week’s salary for each year of service, up to a maximum of 26 weeks. In addition, employers must provide a notice of termination or pay in lieu of notice.
Employers are required to pay severance pay in instances of individual and group termination of employment. Although, there are exceptions when severance pay is not required:
- The employee’s layoff does not result in a termination of employment.
- The employee’s employment contract contains an end date, and the contract ends.
- The employee is dismissed for just cause, or
- The employee terminates their own employment.
Employment Insurance (EI)
In Canada, the Employment Insurance (EI) program is one of the most important safety nets for employees who are laid off. EI benefits offer temporary financial assistance to individuals who have lost their jobs through no fault while looking for employment. Workers receive EI benefits only if they have paid premiums in the past year and meet qualifying and entitlement conditions. Additionally, self-employed workers may participate in EI and receive special benefits. To qualify for EI benefits, you must be actively seeking employment and have worked a certain number of hours within the last year. Moreover, your earnings and the unemployment rate in your region determine how much EI benefits you receive.
Unionized Employees
As a unionized employee in Canada, your rights when laid off are often governed by the terms of your collective bargaining agreement (“CBA”) negotiated between your union and your employer. While specific rights and protections may vary depending on the terms of your CBA and applicable provincial or federal labour laws, here are some common rights and considerations for unionized workers:
- Layoff Procedures: Your CBA may specify the steps your employer must follow when implementing layoffs, including notification requirements, criteria for selection, and any alternative measures such as providing incentives for early retirement or voluntary layoffs.
- Recall Rights: Many CBAs include clauses that provide workers the opportunity to be called back to their previous roles in the event that hiring resumes or the company’s financial situation improves. Recall rights typically prioritize laid-off employees based on seniority.
- Severance and Termination Pay: Severance pay and termination pay depend on various factors such as length of employment, job classification, and the reason for the layoff. Your CBA may outline these provisions for laid-off employees.
- Negotiation and Consultation: Regarding the execution of layoffs, your union may be entitled to consult and negotiate with your employers regarding the implementation of layoffs. This includes the criteria for selection, alternatives to layoffs, and mitigation measures for affected employees.
- Dispute Resolution: Your union may have mechanisms in place for resolving disputes, such as grievance procedures or arbitration.
Temporary Layoffs and Rights to Return to Work
A temporary layoff is when an employer may decide to lay off an employee for a short term with the intention of recalling the employee back to work. The reason for a temporary layoff may be due to a lack of work during periods of economic downturn or business slowdown. In general, employees who are temporarily laid off may be entitled to certain rights and protections, such as the right to be recalled to work within a specified period of time and the right to continue receiving certain benefits during the layoff period.
A layoff becomes a termination of employment when the conditions of temporary layoff no longer apply. If an employee does not return to work when recalled, the employee is considered to have terminated their employment.
If the business circumstances improve, laid-off employees may be entitled to be recalled to their former position. The right to return to work typically depends on the terms of the employment contract, collective bargaining agreement, and employment standards legislation. Generally, employers must inform laid-off employees of any opportunities for recall and offer them the opportunity to return to work if they are qualified for the position.
Conclusion
Overall, facing a layoff can be a stressful event with many considerations. We encourage you to familiarize yourself with your rights and seek assistance from legal counsel if you have questions or concerns about your layoff. Contact Toronto employment lawyers today, online, or by telephone at 416-214-5111.