Experts warn about risks of workers agreeing to seasonal layoffs

Workers in industries that typically experience slow periods during the year might be faced with a seasonal layoff from their employer — but experts say workers should know the risks before signing up to be laid off temporarily.

"The idea is that the relationship is going to resume," said Brittany Taylor, an employment lawyer and partner at Rudner Law. While the employee still remains on the roll, services and compensation pause for a period, she added. 

A seasonal layoff, which is embedded in employment law across several provinces, allows employers to put their staff on pause for a limited time as they weather slowdowns in their businesses or off-seasons. This is different from employment termination, where there's no promise of bringing back the worker. 

As an example, a landscaping or construction business might offer a seasonal layoff to workers through the winter. 

While these kinds of layoffs are legal in industries that have seasonal cycles, companies that don't have regular slowdowns cannot temporarily lay off their workers without consent. 

"If an employer was to simply, unilaterally decide to place an employee on a temporary layoff, that employee could turn around and say, 'This is a constructive dismissal,'" Taylor said. 

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There has to be an agreement between the two parties that will protect both sides and act as a legal mechanism, she added.

"If you're an employer facing a downturn, facing a shortage of work, and you want to lay off an employee, you can get that consent right then and there," Taylor said.

A worker does not have to agree to a seasonal layoff. The risk, however, is that the employer could instead terminate the employee if they don't have enough work or resources to keep them on board, Taylor said.

While on a seasonal break, workers are free to work another job as they wait to be called back, or seek employment insurance to keep themselves afloat during that period, she added.

Elena Giorgetti, a Vancouver-based career coach and organizational consultant, said when people are between seasonal cycles, they typically opt for jobs that provide flexibility so they can return to their original jobs later.

She added that if their industry is prone to seasonal layoffs, the best thing to do is to prepare for it.

Impact of pandemic

Terms of seasonal layoffs have become a common practice in employment contracts across industries — especially since the COVID-19 pandemic, when many businesses faced unprecedented shutdowns, said Michelle McKinnon, partner at Cassels Brock & Blackwell LLP in Vancouver.

"There were a lot of layoffs happening at that time and many employers didn't have consent," she said. "Lots of employers laid employees off for periods longer than that maximum amount of time under employment standards." 

While few faced pushback at that time, McKinnon said many employers began updating agreements to add seasonal layoff clauses to get consent for the future.

Taylor said it has become challenging for workers to negotiate out of these clauses now that so many employers have real-world experience and struggled with it.

While temporary layoff terms can vary from province to province, federal labour standards consider temporary layoffs that are either under three months or between three and 12 months with a promise to be called back.  

Employers are obligated to bring back workers that have been seasonally laid off or they could face consequences, McKinnon said. 

"If you don't bring them back and the layoff extends beyond the maximum period, then at that point it becomes a termination of employment," she said, which could trigger the requirement to pay severance and legal consequences could arise. 

When termination is triggered, it is counted retroactively — going back to the first day of the seasonal layoff. The severance will then depend on the age of the employee and how long they've worked for the company. 

Substantial changes to the employment contract can also get employers in trouble, McKinnon said. 

"Employers can always make some changes within reason," she said. But once it crosses over to something that is significant in fundamental terms such as their wages and the employee doesn't agree, it will be considered a constructive dismissal, McKinnon said.

A worker can also pursue claims in court if they continue to suffer from the dismissal following a seasonal layoff, Taylor said. In the meantime, the employee has an obligation to look for new work and mitigate damages from work loss.