- In the US, companies can lay workers off, and it is up to the individual company whether or not they decide to issue severance pay.
- In Canada the law states that companies can not lay off employees without offering severance pay, and the time to consider the change of employment.
- About half of all adult Americans live pay check to pay check and have no emergency savings.
Companies everywhere are cutting corners due to the coronavirus pandemic. As the economy grinds to a halt in what the International Monetary Fund (IMF) is calling the worst economic crisis since the Great Depression of the 1930s, according to the BBC, over 170 countries around the world are projected to experience negative per capita income growth this year.
Layoffs and furloughs are coming in droves. As an example, Marriott is said to have plans to put thousands of employees on leaves of absence, Tesla is also furloughing all non-essential workers until May 4, and JC Penney is furloughing a large portion of its 85,000 person workforce, to name a few. Can a company lay people off during a time of global crisis such as the COVID-19 pandemic? The answer to that is yes, but depending on where you work and live, there are different rules as to how it can happen.
According to Dictionary.com, to “furlough employees” means to tell workers to not come into work for an extended period of time. Workers are usually not paid during this time, (furloughs usually happen when revenue is scarce), but there are upsides to being furloughed. You usually get to keep any benefits you may have with your position, such as health benefits, and it is generally expected that you will be able to return to your position once there is the revenue to pay employees.
Being Laid Off
When an employee is laid off, this can be either a permanent move or a temporary one. Employees who are laid off permanently have lost their job as well as any benefits that went with it, and will not get the same one back.
Being laid off permanently means that you performed your job well, but the company or organization no longer has the money to pay you. It is different from being fired. Someone who is fired has not performed their job duties as required and has been asked to leave their position because of this.
If you are laid off temporarily, this means that the company no longer has the revenue to pay you at the moment, but that you may be working for them again, in the future. You often lose your pay as well as your benefits when you are laid off temporarily, but there is a good chance that you may have your job back. In many cases, you would have to be rehired, however, in order to get it back.
The Rules During the Pandemic in Canada
According to Howard Levitt, a senior partner of Levitt LLP, writing for Financial Post.com, employees in Canada cannot be laid off without further action during the coronavirus pandemic. You are entitled to receive severance pay from your employer in Canada, if you are laid off.
“A temporary layoff of a non-union employee is, by law, a dismissal and employees who are laid off are entitled to full wrongful dismissal damages of up to 24 months or more depending upon their circumstances,” states Levitt.
“There are circumstances in which a layoff is not a constructive dismissal. The first is if the employee has signed a contract permitting the employer to lay her off subject to recall. I would think that a government compulsory shutdown would also permit a layoff of employees without recourse. But that only applies to relatively few industries, such as restaurants, which the government has specifically ordered be shut down, not to the majority of employed Canadians.”
In Canada, if you work for a business that often does layoffs, such as a seasonal business like summer camp or the construction industry, Levitt says that layoffs are par for the course. However, if you are employed permanently in a position that does not usually experience layoffs you are always entitled to severance pay.
The Rules During the Pandemic in the US
Unfortunately for Americans, the laws are different from Canada’s. Companies in the US are free to lay their employees off at their will. According to CNBC, US federal law does not require American companies to issue severance pay to employees when they are laid off. It is up to the business owners to decide if they are going to do that or not. Many companies do offer some sort of severance pay, but the amount can vary widely. Severance pay more often goes to those in senior positions.
Sadly, a survey done by First National Bank of Omaha in Nebraska showed that 53% of Americans do not have emergency savings set up to draw upon in times of crisis, and half of all US adults are living paycheck to paycheck.