Employers often make the mistake of thinking that they can put an employee on a temporary layoff, so long as they respect the applicable employment standards provisions. To their dismay, they are then served with a constructive dismissal claim. Generally, employers can only lay off an employee if they have the contractual right to do so. Without this express right, a unilaterally imposed layoff is unlawful and exposes the employer to wrongful dismissal damages.

What if an employee requests a layoff? This is rare but there are cases where employees volunteered to be laid off by employers facing financial struggles. In these cases, employers must still ensure that the layoff complies with applicable laws. Indeed, the law makes no distinction between layoffs imposed by employers versus those initiated or requested by employees; the same provisions apply. This was a point of contention in the recent decision Morrison v. 0812652 B.C. Ltd. dba Timberland Consultants, 2024 BCCA 321 (“Morrison”). Morrison provides useful lessons for employers and employees regarding layoffs and resignations.

The decision in Morrison

The employee was a forest technologist who worked for a timber operations company; he was in his 60s and worked with the employer for around 29 years. He sued the employer in 2021, alleging that he was wrongfully dismissed as per the layoff provisions in the British Columbia Employment Standards Act (“ESA”). The employer’s position was that he resigned.

Since the employer operated in the timber industry, it had a fieldwork season and an off-season. The employee had previously taken the off-season for downtime, despite work being available; he normally stopped working and would request a Record of Employment (“ROE”) to collect Employment Insurance (“EI”) benefits. As the 2020 off-season approached, he requested a ROE, but come the spring of 2021, he took a job with a competitor and later sued the employer for wrongful dismissal. The parties went to arbitration.

The employee relied on the ESA’s layoff provisions to deem the alleged layoff a termination and seek wrongful dismissal damages. The employee argued that:

1. He was denied the work he normally did;
2. He was “placed” on layoff;
3. He received no other work; and
4. This was the first time he did not work through the off-season.

The arbitrator found that the employer’s evidence disproved the employee’s claims. He held that there was no termination because the employee “initiated” the layoff, and had he requested work, it would have been given to him – he did not request any work. Consequently, the layoff provisions were not engaged. The employee appealed the decision on the grounds that it created a distinction between employee and employer initiated layoffs.

The Court of Appeal found that while the arbitrator’s language could have been clearer, he did not make the alleged distinction. Rather, the decision turned on his factual findings, which supported the employer’s position.

Notably, the employee sent an email at the start of the off-season requesting his ROE as a major project he was on wound down. He was approached about working on other projects but declined the opportunities. The arbitrator also found that he took time off during the off-season in prior years, contrary to his claim that he had always worked through prior off-seasons. Given these findings, the arbitrator concluded that there was no layoff and no termination – the employee resigned because he did not request work after his time off, and he then sought and took employment with a competitor in early 2021. The Court of Appeal upheld the decision, finding that the employee requested time off as he had normally done in the past; his request did not engage the layoff provisions.

Lessons learned

Morrison shows that both employers and employees must be careful when dealing with layoffs.

For employers, it is crucial to ensure that they have the right to lay off an employee, and that they observe the relevant statutory provisions. This applies even if an employee requested the layoff, as statutory provisions do not distinguish between employee or employer initiated layoffs. Had the employer in Morrison never called back the employee, he would have had a stronger argument regarding the layoff provisions being engaged.

For employees, when requesting a layoff it is important to understand that not returning to work or turning down work can be a resignation. Even in cases where the pause in work can be defined as a layoff, actions showing that the employee does not intend to return to work can turn the layoff into a resignation. This is because layoffs are understood to be temporary; an employee not returning does not fit within that understanding.

In sum, requesting a layoff is not automatically a resignation, but requesting an extended leave of absence and then going to work for a competitor can be.