The COVID-19 pandemic is having an effect on all industries in a manner that has never been experienced before. For this reason, it is important for employers to be prepared to respond quickly and efficiently to this dynamic landscape.
This bulletin will discuss a number of options that employers may have at their disposal during this unprecedented disruption to the workforce.
1. Voluntary and Involuntary Temporary Layoffs
As businesses begin to experience a downturn, employers may need to consider whether temporary layoffs are necessary. The parameters of temporary layoffs are set out in the Employment Standards Act (BC). An employer is only permitted to temporarily layoff an employee in the following situations:
(a) The employee’s contract expressly permits it;
(b) The employer is in a business in which temporary layoffs are a common industry-wide practice. For example, in logging, work cannot be performed during the “break-up” season; or
(c) The employee agrees to the temporary layoff.
If an employer temporarily lays off an employee in any circumstance other than those set out above, the layoff will amount to a termination of the employment and the employer must pay severance/termination pay. A lay off will also amount to the termination of an employee once the layoff length exceeds 13 weeks in a consecutive 20- week period.
2. Terminating Employees
Employers continue to have the right to terminate their employees as a result of economic circumstances so long as they provide appropriate reasonable notice. It is important to note that in addition to being the underlying reason for the termination, if an employee is entitled to receive reasonable notice at common law, then COVID-19 may also impact the amount of notice payable after the termination.
Employees are entitled to reasonable notice at common if they are not subject to an enforceable employment contract that provides for the applicable notice on a without-cause termination. A factor considered by the courts in determining reasonable notice is the availability of work. In the current COVID-19 crisis, the availability of work will presumably be less and this may have the effect of increasing an employee’s reasonable notice period. Previous advice regarding the applicable period of reasonable notice for the termination of an employee, particularly a long term employee or one over 50, may be obsolete. If an employer is considering terminating an employee they should seek the advice of a legal professional regarding their specific circumstances.
3. Group Termination
Certain employers may need to consider whether group terminations are necessary during the COVID-19 crisis. In British Columbia, the Employment Standards Act (BC) governs group terminations. The applicable statutory provisions apply where an employer terminates 50 or more employees at a single location within any 2 month period. In such a case, the employer must provide written notice to the group that sets out the following:
(a) The number of employees who will be affected;
(b) The effective date or dates of termination; and
(c) The reason for termination.
Under this option, the employer is also required to provide notice in advance of the termination. The amount of notice required will be dependent on the number of employees affected.
4. Bill 16 – Amendment of the Employment Standards Act (BC)
On March 23, 2020 the BC Government passed an amendment to the Employment Standards Act (BC). This amendment creates/modifies the leave provisions under the Employment Standards Act (BC) specifically in regards to COVID-19. The purpose of the amendment is to ensure that employees who are affected by COVID-19, or who are complying with BC Health Authorities’ recommendations, directions, or guidelines in regards to COVID-19, do not lose their jobs.
Specifically, the amendment provides unpaid job protective leave for those in COVID-19 related circumstances, retroactive to January 27, 2020. The protection applies to:
(a) Employees diagnosed with COVID-19;
(b) Employees in quarantine in accordance with the direction (orders or guidelines) of medical health professionals;
(c) Employees directed by their employer to stay home because of exposure to a person with COVID-19;
(d) Employees who have returned from travel; and
(e) Employees who have to stay home to care for a child due to closures of day cares, schools other child-care facilities, or an elderly person in the same circumstances.
Employees on leave cannot be terminated or have the terms of their employment unilaterally changed while on unpaid leave. They must be returned to their previous position or a comparable position when the leave ends. If the employer’s operations are suspended, upon resuming business, the employer must then return the employee to their previous position or a comparable position.
In order to receive unpaid leave in relation to COVID-19, an employee must simply request leave. While the employer has a right to ask the employee for some evidence of circumstances, the bar for such evidence will be low. Specifically, no doctor’s note will be required if an employee is requesting leave as a result of being diagnosed with COVID-19.
This provision was announced very shortly before publication of this update, so further guidance will likely be provided in the coming days.
5. Frustration of Employment Contract
Like any contract, an employment contract can be “frustrated” in circumstances where a situation arises which:
(a) makes further performance of the contract impossible or radically different from what the parties agreed to;
(b) cannot be considered the fault of either party; and
(c) Is not adequately anticipated by the contract.
If an employment contract is frustrated, an employer will not be required to provide notice of termination of pay in lieu of notice.
Frustration and Minimum Standards
Typically, employment standards legislation requires employers to provide employees with notice of termination or pay in lieu of notice upon the termination of the employment contract. However, s. 65 of the Employment Standards Act (BC), establishes statutory exemptions to the usual rights of employees to receive written notice or pay in lieu of notice. In particular, s. 65 applies to an employment contract that is impossible to perform due to an unforeseeable event or circumstances, thereby codifying the doctrine of frustration.
Does COVID-19 Constitute Frustration?
Most often frustration arises in the termination of an employee following an illness or an injury that prevents the employee from working. However, the COVID-19 global pandemic introduces an interesting legal question, is COVID-19 an Act of God or unforeseeable event which may frustrate an employment contract?
While we are unsure of the length with which the COVID-19 pandemic will last, we know that there are many businesses temporarily closing down as a result of the downturn in economic activity, thereby making many employment contracts unnecessary and perhaps even frustrated.
Whether COVID-19 constitutes an Act of God, and is sufficient to constitute frustration, is still unknown, but our view is that the Employment Standards Branch is unlikely to find frustration in all but the clearest of cases. The courts may be slightly more open to the argument, but strong evidence will be required. Organizations considering adjusting their workforce or terminating employment contracts should contact a legal professional to consider their specific circumstances.
6. Employment Insurance (“EI”) Sickness Benefits
The Canadian Government announced changes to Canada’s sickness benefits under employment insurance in order to respond to growing concerns over the COVID-19 pandemic.
What are EI Sickness Benefits?
Eligible workers with no or limited paid-leave benefits thorough their employers can apply for up to 15 weeks of employment insurance if they cannot work for medical reasons, including being quarantined as a result of COVID-19.
The sickness benefits currently allow a party to receive 55% of their earnings up to a maximum of $573 per week.
Government Changes in Response to COVID-19
Under normal circumstances, an employee seeking sickness benefits is required to wait a period of one week before receiving their sick-benefits. In the case of a 14 day COVID-19 quarantine, this would result in the employee receiving only one week of payment during the 14 days of quarantine. However, in recognition of the pandemic and the growing number of employees forced to self-quarantine, the Government of Canada eliminated the waiting period entirely so that an employee may receive EI sickness benefits for the entire quarantine period. The last time the Government introduced this measure was during the 2003 SARS epidemic.
Qualification for EI Sickness Benefits
Employed individuals who pay EI premiums, and self-employed people who are registered to participate in the EI program, may qualify for EI sickness benefits if they satisfy the following factors:
(a) They cannot work because of a medical condition;
(b) They have lost at least 40% of their weekly pay; and
(c) They worked a minimum of 600 hours in the year before the claim or since their last EI claim.
Currently, the Government of Canada is waiving the requirement for patients to obtain a doctor’s note to apply for EI sickness benefits if they are required by law or by a public health official to quarantine for 14 days. Additionally. individuals who are asked to quarantine by their employer upon the advice of public health officials can also qualify for the EI sickness benefits.
If an individual’s quarantine is extended as a result of testing positive for COVID-19, the individual will be required to obtain a signed medical certificate confirming the diagnosis in order to continue receiving the EI sickness benefits beyond the initial 14 day period.
7. Work Sharing Agreements (“WS Agreements”)
Work-sharing is a federal government program designed to help employers and employees avoid layoffs where there is a temporary reduction in the normal level of business activity that is beyond the control of the employer. In the program, employment insurance benefits are provided as income support for employees who work a temporarily reduced work week throughout a business downturn. Affected employees must agree to work a reduced schedule and share available work over a specific period of time.
The maximum duration of a work-sharing period is normally 38 weeks. However, the Government of Canada introduced temporary special measures which extend the duration of the WS Agreements from 38 weeks to 76 weeks (upon application by the employer) for organizations affected by the downturn of business due to COVID-19. The temporary measures also ease the recovery plan requirements for the WS Agreements and allow employers with a recently expired WS Agreement to immediately apply for a new agreement without waiting between applications.
Application for WS Agreements
In order to apply for a WS Agreement, the employer and the employees (and the union, if applicable) must agree to participate in a WS Agreement and must apply together. It is important to note that an application must be submitted a minimum of 30 days prior to the requested start date.
More detailed information about the work-sharing program for those impacted by COVID-19 can be found here.
8. Records of Employment
If an employee is placed on temporary layoff, terminated, or starting a WS Agreement, then the employer must provide a Record of Employment (ROE). The Government of Canada provides step by step instructions to assist employers in completing an ROE.
Read more EKB Updates about the legal implications of COVID-19 and the impact on business in British Columbia.