I have (as have, I imagine, all employment lawyers) been asked by employer clients over the years, “If an employee requests a layoff, does it still count as a layoff?” My answer has always been, “A layoff is a layoff is a layoff… the B.C. Employment Standards Act makes no distinction based on whose idea it was”.
As a result of a recent B.C. Court of Appeal decision (Morrison v. 0812652 B.C. Ltd. dba Timberland Consultants), I may now have to reconsider that advice.
Why Does It Matter?
The reason why employers ask this question is that the ESA sets a threshold (13 weeks out of any 20 consecutive weeks) at which a temporary layoff becomes a termination. A termination brings with it the obligation to provide pay in lieu of notice (which obligation can arise both out of the ESA and – much worse – pursuant to the common law).
That being the case, employers are interested to know – in advance – whether the voluntary layoff they are granting to an employee might come back to hit them in the pocketbook.
Why Do Employees Request a Layoff?
In my experience, employees request a layoff so that they can (for instance) take the winter off and collect E.I. benefits prior to returning to work at some later date. This is a bit of a sticky situation for the employer because, in order to qualify for E.I. benefits, the employee needs the employer to issue a Record of Employment (ROE) indicating – for instance – a “shortage of work”.
I call it sticky because of my concern that employers providing this assistance are flirting with E.I. fraud. Being dishonest on the ROE form – submitted to the government for the purpose of facilitating an employee’s desire to take the winter off with pay – could bring significant consequences for the employer (though I’ve personally never seen an instance of that).
What Was Morrison’s Story?
The background is that Morrison, a forest technologist, had worked for Timberland Consultants for almost 20 years. In late 2020, he initiated his own layoff by asking to be provided an ROE and indicating his own last day of active work.
He never did return to work and, in mid-2021, his legal counsel wrote to Timberland, advising that Morrison “had a constructive dismissal claim” against it. In effect, Morrison was trying to use the fact of his indefinite layoff as the basis for claiming damages in lieu of notice (pursuant to the ESA and the common law) from his employer.
Timberland’s view of the matter was that, in effect, Morrison had quit his employment. As Timberland put it, “The claimant requested layoff so that he could collect EI and enjoy some downtime as he had worked far more in the previous year than in any prior year.”
The dispute headed to arbitration, where Timberland contended it did not take any action to precipitate Mr. Morrison’s layoff; instead, Mr. Morrison asked, as he had in prior years, to be laid off during the off-season.
The arbitrator dismissed Morrison’s claim, finding…
“On the evidence, it is clear to me that the layoff was initiated by Mr. Morrison. This was consistent with what had occurred in December 2014, December 2016, November 2017, December 2018, and March 2020. It is also clear to me that if Mr. Morrison had requested work from Timberland outside of the TCP Contracts, it would have been provided. However, no work was requested. These facts do not support an application of the deemed termination provisions set out in the Act, which contemplate a layoff initiated by the employer.”
All of which, practically speaking, makes some good sense. Morrison initiated the layoff, himself, so he shouldn’t receive a windfall in the form of damages for wrongful dismissal. Except, the ESA says nothing about such a distinction. Hence, Morrison appealed the arbitrator’s decision.
What Happened at the Court of Appeal?
The B.C. Court of Appeal summarized the basis for the appeal, as follows.
[35] The appellant contends the arbitrator dismissed his wrongful dismissal claim on the basis of an erroneous legal interpretation of the ESA. More specifically, the appellant submits the arbitrator dismissed his claim by drawing a distinction between a layoff initiated by an employee and one initiated by an employer, finding that only the latter could result in the termination of employment. The appellant argues that “[t]his distinction was created entirely by the [a]rbitrator and relied upon as the determinative factor in dismissing the [a]ppellant’s claim”.
On the face of the layoff and termination language contained in the ESA, it’s difficult not to accept this proposition (and, effectively, this is the basis for the “a layoff is a layoff is a layoff” advice I’ve given to clients over the years). However, in a split decision, the Court dismissed Morrison’s appeal and upheld the arbitrator’s decision.
Employing (in my humble opinion) some logical gymnastics, the Court of Appeal found as follows.
[43] In this case the issue that is now raised by the appellant played no role in the arbitration. The question for the arbitrator was not whether an employee-initiated layoff as opposed to a company-initiated layoff engaged the ESA. The question, as described by both Mr. Morrison and the arbitrator was whether Mr. Morrison was “terminated” or he “resigned”.
[44] I have said that the primary position of each of the parties, as reflected in their respective pleadings, affidavit evidence and submissions, centred around a factual dispute. Mr. Morrison’s case for dismissal was based on the work he had done for many years being “diverted” from him, on his being “placed” on a layoff, on his not receiving or there not being any work for him during the off-season, and on this being the first time he had not worked through the off-season.
…
[46] The arbitrator accepted Timberland’s evidence. He found that what occurred in 2020 “was consistent with what had occurred” in numerous previous years. He also found that if Mr. Morrison had sought work from Timberland during the 2020 off-season, that work would have been provided to him.
[47] It was based on these findings that the arbitrator concluded Mr. Morrison was not terminated and that the deemed termination provisions in the ESA were not applicable. Further, it was in the context of the factual matrix I have described that the arbitrator’s impugned statements in the Award must be viewed. Though not expressed clearly, I am satisfied that, in context and properly understood, the arbitrator was not saying that layoffs initiated by an employee do not, as a matter of interpretation or principle, fall within the ESA. More specifically, I am satisfied the arbitrator did no more than confirm that an employee who independently asks for an extended holiday, or a sabbatical, or personal “downtime” does not thereby engage or activate the “temporary layoff” provisions of the ESA.
In effect, the Court accepted that Morrison had not been laid off (and, after the requisite period of time, terminated). Instead, he had resigned. Hence, no damages were payable in lieu of notice of termination.
But, as counsel for Morrison ably pointed out, the ESA doesn’t contemplate any such distinction. More specifically, the ESA doesn’t speak at all to the question of who initiated the layoff. It simply states, at s.63(5), “the employment of an employee who is laid off for more than a temporary layoff is deemed to have been terminated”.
What Now?
It seems the Court of Appeal has opened an avenue for employers – who have granted an employee a voluntary layoff – to assert that (if that layoff exceeds 13 weeks in any period of 20 consecutive weeks) the employer is not on the hook to pay ESA damages in lieu of notice. The Court’s award leaves unanswered the question of what it means for common law damages.
Notwithstanding that the Court of Appeal is the highest court in B.C. – and ignoring, for the moment, the possibility that Morrison might take his claim to the Supreme Court of Canada – I still think that employers should stick to the “a layoff is a layoff is a layoff” approach to this subject. I have to think the Employment Standards Tribunal will have something to say on this topic and that this ruling may not have a long lifespan.
And, about that whole E.I. fraud thing… I routinely advise clients to be totally honest when filling out the ROE form. That’s legal advice that will never go out of fashion.
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This item is provided for general information purposes only and is not intended to be relied upon as legal advice. Informed legal advice should always be obtained about your specific circumstances.