Canada: Interpreting Section 64 Of The BC Employment Standards Act: When Does Termination Occur For Employees With Recall Rights?

Previously printed in the LexisNexis Labour Notes Newsletter.

On January 9, 2023, the BC Labour Relations Board released its decision in the matter of Canadian Forest Products Ltd. (MacKenzie Wood Products Division) -and- Pulp, Paper and Woodworkers of Canada, Loc. No. 18, 2023 BCLRB 5. The Board overturned the award of Arbitrator Nicholas Glass issued on May 10, 2021 (the "Award"), in which it had been found that employees laid off as the result of the closure of Canfor's lumber mill in Mackenzie, BC were entitled to group termination pay under section 64 of the BC Employment Standards Act (the "ESA").

The facts that gave rise to the Award, and the subsequent application for reconsideration, were as follows. On June 10, 2019, Canfor announced a temporary closure of its Mackenzie mill, with an anticipated reopening date of July 28, 2019. One week later, on June 17, 2019, Canfor laid off almost all of the mill's 187 bargaining unit employees. On July 18, 2019, the employer announced that the curtailment would be extended indefinitely.

The union then filed a grievance which included a claim for group termination pay under section 64 of the ESA. The employer took the position that a group termination would not result from the closure of the mill, as the employees were subject to staggered rights of recall. Those rights of recall would not expire for a group of 50 or more employees within a two-month period.

The issue before Arbitrator Glass was whether for the purposes of section 64 of the ESA, termination occurs on the expiry of an employee's right of recall or, alternatively, once the period of recall has expired, whether the termination is deemed to have occurred effective the first day of the layoff.

In deciding that the employees were entitled to group termination pay in the Award, Arbitrator Glass departed from the earlier decision of Arbitrator Pekeles in Midway Forest Products -and- United Steelworkers, Loc. 1-423, Ministry No. A-097/09 ("Midway"). In that decision, it was found that the correct interpretation of section 64 of the ESA is termination occurs on expiry of an employee's right of recall (the "Midway Approach").

Arbitrator Glass rejected the Midway Approach. He found that once an employee's right of recall expires, he or she is considered to have been dismissed effective the first day of the layoff.

Canfor applied for reconsideration of the Award under section 99 of the Labour Relations Code.

Applying a standard of correctness to its review of the Award, the Board held that the correct interpretation of section 64 of the ESA is that termination occurs on expiry of an employee's right of recall - consistent with the Midway Approach. There were accordingly not 50 or more employees dismissed within a two-month period following the closure of the MacKenzie mill, and the group termination obligations under section 64 was simply not triggered.

The Board was heavily persuaded by the deeming clause contained in section 63(5) of the ESA:

For the purpose of determining the termination date under this section, the employment of an employee who is laid off for more than a temporary layoff is deemed to have been terminated at the beginning of the layoff.

[Emphasis added.]

Section 63 of the ESA deals with individual termination obligations. Section 64 does not contain a similar deeming provision. Significantly, in 2002, section 63(5) was amended to add the words "under this section" after the BC Employment Standards Tribunal had interpreted the deeming language at section 63(5) as applying equally to section 64. The Board concluded it was clear that the Legislature intended to clarify that the deeming language applied only to section 63 and not section 64.

The Board went on to find that "the Arbitrator's interpretation begins with a preferred outcome and attempts to justify that interpretation of section 64". The Board overturned the Award and dismissed the grievance.

The other notable aspect of the Board's decision is that it exercised its discretion to allow the Employer to file its section 99 application late - after the BC Court of Appeal declined to take jurisdiction. The Board held that it had a compelling reason to grant the extension, since the Award and Midway were completely at odds and irreconcilable and declining to hear the application would leave the conflicting interpretations of section 64 of the ESA unresolved, not just for these parties but for others as well.

Given that the Board's decision addresses an important question of legislative interpretation, it is highly likely that the union will apply for reconsideration.

While every effort has been made to ensure accuracy in this article, you are urged to seek specific advice on matters of concern and not to rely solely on what is contained herein. The article is for general information purposes only and does not constitute legal advice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.