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Many B.C. businesses haven’t accounted for severance, ask for layoff extension

Extension to August aligns with emergency benefits and would give businesses “breathing room” to return furloughed employees upon re-opening: Coalition group
B.C. business groups are asking Labour Minister Harry Bains for an extension on a deadline by which they would be compelled to make layoffs permanent

B.C. business groups are asking the provincial government to extend the temporary layoff time period until August 31, to prevent COVID-19-affected companies from closing permanently should paying severance to employees exceed their fiscal capacity.

Underscoring this call for action is the assertion many businesses have not adequately saved money for such a statutory benefit.

“Few business owners could plan for or have the cash-on-hand to terminate all or a significant portion of their workforce at once during the best of times,” a coalition of business groups wrote to Labour Minister Harry Bains Monday, as the B.C. legislature resumed in quasi-virtual capacity.

Under the B.C. Employment Standards Act, employees laid off for more than 13 weeks are automatically deemed to be terminated, and eligible for severance. The B.C. government extended that period to 16 weeks, to the end of this month. An employee is typically entitled to one week’s worth of pay for each year of employment, up to eight weeks of pay. Section 65 of the Employment Standards Act allows for unforeseeable circumstances that may let employers off the hook in paying severance, however there is uncertainty surrounding the application of such a clause.

“These one-time severance payments to temporarily laid-off employees due to COVID-19 will mean businesses caught in this legal jeopardy will use all or most of their operating cash or lines-of-credit forcing them into bankruptcy, insolvency and/or permanent closure,” wrote the Surrey Board of Trade, BC Chamber of Commerce, Greater Vancouver Board of Trade, Canadian Federation of Independent Business, Independent Contractors and Businesses Association and Business Council of British Columbia.

The requested extension to the end of August would align with the latest deadline for the end of the federal Canada Emergency Response Benefit, noted the coalition.

So far, the B.C. government has proposed a case-by-case assessment of extending temporary layoffs. The coalition calls this “an unworkable and hollow offer given the current backlog in the Employment Standards Branch.”

The BC Liberals asked BC NDP Premier John Horgan in question period Monday about extending the period, which would theoretically give businesses more time to get back on their feet and re-open, but also leave furloughed workers in limbo.

“Many businesses and not-for-profits have only partially opened, while many others are still not permitted to open at all. If the NDP government doesn’t give these employers the opportunity they need to recover, then thousands of businesses will face bankruptcy and thousands of jobs will be lost for good,” said MLA John Martin, BC Liberal labour critic, in a media statement Monday.

Martin echoed the coalition: “The Minister has it within his power to provide a Ministerial Order to extend the temporary lay-off time limits under the Employment Standards Act (ESA) to provide employers with the ‘breathing room’ needed to survive, recover, and facilitate return-to-work for laid-off employees as possible.”

Horgan said he would be meeting with Bains and business groups this week to discuss the matter, however he remained steadfast that businesses that do layoff employees should be accounting for severance pay.

“The whole point they’re asking for relief is they can’t afford the severance,” Horgan told the House.

MLA Jas Johal cited a business in his Queensborough-Richmond East riding that temporarily laid off five of six employees and doing so permanently – and triggering severance – would bankrupt the business.

Employers in B.C. can try to argue that the terminations were the result of unforeseen circumstances, but as Ryan Anderson, a lawyer specializing in employment law at Mathews Dinsdale & Clark LLP, points out, they would have to make that argument with the Employment Standards Branch.

“They’ll have to duke it out with the Employment Standards Branch.  If I knew what my liability was, I might be able to make some rational decisions. If I fear that my liability might be $1 million, I might declare bankruptcy,” Anderson told Business in Vancouver last week.