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COVID-19 – Termination or Lay Off?

In these unprecedented times, many employers are faced with unexpected closures of rapid downturns in business that unfortunately requires a decision to lay off or terminate employees. Employers can find other articles on the means and process of termination on our website here. This article will explore the risks and requirements of employers facing the decision to terminate employees.

The laws regarding termination of employment are generally viewed as being pro-employee, requiring employers to provide “reasonable” notice on termination as well as other important factors during the employment relationship, including minimum wage, overtime, vacation pay, etc. Employment law has evolved from the last 40+ years of case law and codification of modern employment legislation, including the Employment Standards Act, RSBC 2001, c.113 (the “ESA”).

There are three ways that the employment relationship can be terminated:

  1. Resignation by the employee;
  2. Termination for cause; and
  3. Termination without cause.

In the event of COVID-19 required terminations, the termination would be without cause, meaning that the employment relationship has come to an end through no fault of the employee, but rather due to a downturn in business or unexpected closure.

An employer is permitted by law to terminate an employee without cause provided adequate notice is provided to the employee under the ESA and the common law, as discussed in greater detail below.

When an employee is terminated without cause, the employee is required under the ESA to provide notice to the employee. The notice requirement is determined strictly by the length of service as follows:

Length of Service Notice Required under ESA
Less than 3 months No notice required
3 months to 1 year 1 weeks’ notice
1+ years to 3 years 2 weeks’ notice
3 – 4 years 3 weeks’ notice
5 – 6 years 5 weeks’ notice
6 – 7 years 6 weeks’ notice
7 – 8 years 7 weeks’ notice
8 or more years 8 weeks’ notice

A week’s pay is calculated by:

  • Totalling the employee’s wages, including overtime, earned in the last eight weeks in which the employee worked normal or average hours; and
  • Dividing the total by eight.

Additional notice or pay in lieu is required if 50 or more employees are terminated within a two-month period at a single location.

As the ESA is legislation, the employer is required to provide the notice requirements as outlined above based on the employee’s years of service, without exception on termination without cause.

However, the courts in BC and throughout Canada have consistently held that the various provincial ESA legislations are the absolute minimum notice that an employer is required to pay on termination without cause. Throughout the last 60 years, the Courts in Canada have implemented a more appropriate notice requirement based on various other factors beyond simply length of service. These factors include: Character of employment; Length of service; Age of the employee; Availability of similar employment but have expanded over the years to cover a myriad of employment situations.

The only way for an employer to avoid payment of reasonable notice (beyond the ESA minimum amounts) is having an Employment Agreement that provides an agreed maximum amount payable on termination, provided it is not less than the notice requirements under the ESA. Absent a valid Employment Agreement, the employer is required to pay notice under the ESA and in accordance with a reasonable notice amount determined by the courts and common law.

Generally, older employees, employees earning higher remuneration, employees in managerial or executive roles, or employees who have a disability or health concern take longer to find suitable alternative employment and they fall into the higher range of the reasonable notice scale towards 4 to 6 weeks of notice per full year of employment. Alternatively, lower level employees, employees with a basic skills set, employees who earn minimum wage or a lower level of remuneration, employees who are younger and without a disability or health concern are generally quicker to find alternative employment, so the reasonable notice provided to them would be on the lower end of the scale towards 1 to 2 weeks per full year of employment. Accordingly, while the ESA amounts payable to an employee are fixed amounts solely based on length of service, every employee is going to receive a slightly different notice period specific to the common law / court decisions that may apply to their specific situation.

As always, before making a decision, it is always safest to check your position with an Employment lawyer who can guide you through the myriad of ever-changing issues surrounding COVID-19, and the unprecedented recommendations for self-quarantine, travel restrictions, and closures of non-essential businesses.

Please feel free to contact the Employment Law Group at Doak Shirreff Lawyers LLP for more information by contacting Scott Chambers at [email protected], or call 250-763-4323, or through our toll-free number at 1-800-661-4959. We can consult with you remotely as needed.