The Legal Lowdown on Layoffs

We are in the muck with you facing some of the biggest challenges to date, with no real precedent for what to do in these cases. All we can do, is remind ourselves of our collective community effort to keep as many people as healthy as possible and ask for help when you need it. With that, many of you have asked for help, so we (Kirsten Hume Scrimshaw, partner at Ally Workplace Law and I) thought we would share the love so everyone can benefit and we’re here to help and support your business during these times.

THE LEGAL LOWDOWN Health and Safety Issues The first issue all employers should be thinking about as the COVID-19 pandemic progresses is the health and safety of employees and customers. It can be exhausting to keep up with the order and recommendations of the BC Provincial Health Officer and the Public Health Agency of Canada, but it has to be a priority. Because COVID-19 has been classified as a pandemic, employers are required to conduct a risk assessment and take steps to reduce the risk to employees if they are not able to work from home. Based on current recommendations, this might involve:

  • Mandating physical distancing in the workplace.
  • Providing protective equipment to employees.
  • Increasing workplace sanitizing and cleaning.
  • Requiring employees to self-isolate if necessary.

The obligation to keep employees safe is ongoing, so make it a habit to review the daily updates from the BC Provincial Health Officer and review updates to the Government of Canada COVID‑19.

Employee Absences: What Are Our Options? Based on current recommendations and order, you may have employees who are required to self-monitor, self-isolate or quarantine. Here are the differences between self-monitoring, self-isolation, and isolation. Ontario has already passed emergency legislation providing additional protections to employees who can’t attend work because they are required to quarantine or self-isolate, and the BC government is likely to return to an emergency session soon to look at changes to the BC Employment Standards Act as well. Again, it is important to look out for any changes to employers’ obligations as the pandemic progresses. For now, there have been changes to Employment Insurance (EI) to waive the usual one-week waiting period for employees who are quarantined, as well as steps to speed up applications for these employees. Employers should ensure they provide an ROE promptly to allow quarantined/self-isolated employees to proceed with an application for EI sickness benefits. It’s also important to comply with the employer’s duty to accommodate employee absences due to medical issues. This means that you can’t simply terminate the employment of someone who is absent for medical issues; we recommend talking to an employment lawyer to ensure you meet your obligations under the Human Rights Code if this issue arises.

Options for Slowdowns (Short of Layoffs) Employers are working hard to find a way to keep their operations viable right now, and the key to success on this front is creativity. If you can find a solution that employees agree to, this can avoid a lot of potential legal headaches. If you’re one of the luckier ones who is not considering a permanent or temporary operational slowdown right now, then you may consider:

  • Having employees take time off (vacation, banked time off in lieu of overtime, or other paid leave).
  • Asking for employees to volunteer for temporary unpaid leave (with benefit continuation during the leave).
  • Exploring whether some employees would agree to go part-time.
  • Applying under the Work-Sharing program to give you up to 76 weeks to recover from this downtown while retaining all staff, but at reduced capacity.

This is a time for transparency and creative solutions to band together in these uncertain times. All of the above options are within your rights as an employer. You can set up dates for checking in or actual dates for return to work and at what capacities. If you do get an agreement to changes to working conditions, make sure you get something in writing to document what the terms of the new agreement are, and when it will be re-evaluated.

Layoffs and Slowdowns  A lot of businesses are facing drastic slow-downs and even shut-downs, and looking at using temporary layoffs in response. The BC Employment Standards Act says that a temporary layoff is either 13 weeks in a 20-week period, or a period of time that exceeds an employee’s right to recall where such a right exists. But, there’s some stuff you should know about layoffs. If you don’t have a right to layoff expressly set out in your employment agreement, a temporary layoff of a non-unionized employees may amount to a constructive dismissal and lead to liability for termination pay. But, because we’re in unprecedented times, employers may be in a position to argue this is not a conventional layoff, but due to forces outside its control (closer to a government-imposed shutdown). In some cases, an employer may even be able to say that the employment agreement is frustrated because it has become impossible for the employment agreement to be performed. If that’s the case, then the contract ends and the parties are released from performing the contract. This will be assessed on a case-by-case basis (although all courts are currently closed to non-essential stuff!) and a specialized employment lawyer can assist with this.

Termination of Employment If you’re finding yourself in a business that is either government-mandated to shut down because you can’t conform to the social distancing rules or that you choose to shut down because of the lack of revenue, you may have no choice but to terminate employment of some employees. Also, if a “temporary layoff” ends up exceeding 13 weeks in a 20-week period, the layoff becomes a termination by operation of law, raising additional obligations for the employer. In this case, you will need to ensure you comply with obligations under the employment contract (if you have one), the common law, and the applicable employment standards legislation (likely the Employment Standards Act). If you are contemplating terminations, especially if a large number of employees are affected, you should seek advice on options such as working notice versus termination pay, to see which options might work best for your business. Also, if a large number of employees will be affected, you should get advice on mass termination provisions of the Employment Standards Act.

Employment Insurance: The Nitty Gritty Any time there is an interruption in earnings, an employee may be eligible for EI benefits. Eligibility requirements such as the number of insurable hours an employee must work to qualify vary by region, but for Metro Vancouver, the current requirements are 700 hours in the last 52 weeks. As the federal government continues to look at options to provide financial assistance to those affected by loss of work during the pandemic, details of requirements and processes may change. For now, here’s a step by step guide for employers, although more details will be rolled out in the coming weeks:

1.  Start by issuing the ROE within five days of the employee’s “interruption in earnings” using Code A (likely). Code A includes:

  • End of contract or season.
  • End of casual/part-time work.
  • End of school year.
  • Temporary shutdown of operations.
  • Permanent shutdown of operations.
  • Position eliminated/redundant.
  • Company restructuring.
  • Employer bankruptcy or receivership.

2.  The employee can start the process of applying for EI through their CRA My Account or online.

Staying on Track Everyone is currently scrambling to stay on top of constant changes, and it can be intimidating to know what to do. The law as we knew it before COVID-19 is changing, and we don’t yet know how the principles will be applied in the circumstances of an unprecedented pandemic. Combined with the current lack of court resources to enforce certain rights and remedies, there is a tremendous amount of uncertainty right now. We are consistently advising employers to keep in mind that, regardless of the law, everyone is observing how different businesses are responding to the crisis; your reputation as a business and as an employer continues to play an important role in any decision. We continue to work with employers as an ally to try to guide them through this difficult time. Hang in there, Elizabeth and Kirsten

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