COVID-19: Managing your Workforce in Periods of Economic Uncertainty

The current COVID-19 pandemic has caused considerable upheaval and uncertainty for the economy. This uncertainty, upheaval, and the responses thereto affect both employers and employees.

Given the communicability of the virus, federal and provincial health authorities have recommended that all Canadians self-isolate and practice drastic social distancing to assist in slowing the spread of COVID-19. These precautions have had the unfortunate effect of interrupting consumer and supplier activities, causing businesses to experience a loss in not only profitability, but more immediately, revenue streams.

In these circumstances, businesses need to be able to quickly respond to market downturns to safeguard their continued economic viability. However, employers owe a number of legal obligations to their employees, which must be observed. In this article, we explain an employer’s rights and obligations in the termination of an employment relationship, and the measures that the Government of Canada (the “Government”) has put in place to aid both employers and employees during this period of economic uncertainty.

Temporary layoffs and the termination of employment relationships.

In British Columbia, an employee is considered to have been “laid off” when they earn less than 50% of their regular weekly wages, averaged over the previous 8 week period. Depending on the circumstances of the employment, a lay off may be invalid and immediately deemed a termination of employment, triggering the employer’s obligation to provide reasonable notice of termination or pay in lieu.

The British Columbia Employment Standards Act (the “Act”)[1] does not provide a statutory right to lay off their employees.[2] However, in certain circumstances an employer may temporary lay off its employee, without running afoul of the Act. “Temporary Layoff” is defined under the Act as:

(a) in the case of an employee who has a right of recall, a layoff that exceeds the specified period within which the employee is entitled to be recalled to employment, and

(b) in any other case, a layoff of up to 13 weeks in any period of 20 consecutive weeks.

Any lay off that is not a “temporary layoff” as defined by the Act constitutes a termination of the employment relationship.

However, employers must be cautious when considering whether to rely on the “temporary layoff” provisions of the Act, as Courts have consistently held that employers are not permitted to temporarily lay off an employee, for any length of time, unless:[3]

1. the employment contract expressly provides for the right to temporarily lay-off an employee;
2. the right to temporarily lay off an employee can be implied into the contract by well known industry practice; or
3. the employee agrees to being temporarily laid off.

Similarly, the law in Ontario also prohibits employers from laying off their employees, absent an express or clearly implied term in the employment agreement to that effect.[4]

Ultimately, the employer bears the burden of proving that the contract of employment contemplated temporary layoffs or that the layoff in question was agreed to by the employee.[5]

We recommend that employers consult with our workplace lawyers before deciding to lay off their staff during the COVID-19 outbreak.

Assistance to businesses and employees

In response to the COVID-19 emergency, the Government of Canada (the “Government”) has rolled out a number of economic assistance plans for both businesses and employees. We do not provided an exhaustive list, and note that this list is likely to change in the coming days, weeks and months.

There have been considerable changes in the Government’s planned assistance packages over the last week. On March 25, 2020, the Government announced that it would be revising a proposed assistance package made up of the Emergency Support Benefit and Emergency Care Benefit in favour a more streamlined and accessible approach. The new Canada Emergency Response Benefit (CERB) is an amalgamation of the previous proposals and is intended to be more widely available and more easily administered than the initially announced benefits.

Canada Emergency Response Benefit.

The CERB is a taxable benefit which will provide $2000 per month, for up to four months, to workers who lose their income as a result of the COVID-19 outbreak, regardless of whether they are otherwise eligible for EI Benefits.

The CERB is available to all employees and wage earners, including self-employed people and independent contractors, who have lost a job because they are sick, quarantined, or are unable to earn income because they are taking care of a loved one who is sick or who requires care due to school and daycare closures. Moreover, workers who are still employed but who have lost income as a result of disruptions in their workplace due to COVID-19 are also eligible to receive benefits under the CERB. In short, income assistance under the CERB will be broadly available to all Canadians who have experienced a disruption in their ability to earn income due to COVID-19.

The Government intends to begin taking applications for the CERB, through the “My CRA” and “My Service Canada” online portals, in early April. Benefit payments under the CERB will begin within 10 days of the  application and will continue to be paid every four weeks thereafter. The CERB benefit period will run from March 15, 2020 through October 3, 2020.

Individuals who are currently in receipt of EI Benefits (as of March 25, 2020) will continue to receive those benefits and should not apply for assistance under the CERB. Moreover, those individuals who have already applied for EI Benefits but whose application has not yet been processed need not reapply for the CERB.

Those who are currently in receipt of EI Benefits, and whose benefit period ends prior to October 3, 2020 may apply for the CERB if they remain unable to work due to COVID-19. Lastly, individuals who are eligible for EI Benefits and remain unemployed will still have access to those EI Benefits following the expiration of the CERB period of October 3, 2020.

More information about the CERB can be found here:

https://www.canada.ca/en/department-finance/news/2020/03/introduces-canada-emergency-response-benefit-to-help-workers-and-businesses.html

Regular EI Benefits

Regular EI Benefits are available to employees who have been laid off or lost their job through no fault of their own. Regular EI provides claimants with 55% of their average weekly earnings up to a maximum weekly benefit of $573, for up to a period of 45 weeks, depending on the Claimant’s geographic location.

EI Sickness Benefits

EI Sickness benefits are available to those employees who miss work due to sickness or quarantine. In light of the COVID-19 crisis, the Government has waived the general one week waiting period for new EI Sickness Benefit claims for those who are sick or quarantined, meaning that Claimants may now be paid for the first week of their claim. Moreover, people claiming EI Sickness benefits as a result of being quarantined are not required to provide a medical certificate as evidence of their inability to work.

The following are some of the benefits that are available to businesses affected by COVID-19:

Expanded work-sharing programs

The Government has extended the maximum duration of EI Work-Sharing Agreements to 76 weeks, allowing employers to keep staff on the payroll longer, despite the COVID-19 related economic downturn.

Small Business Wage Subsidies

Some small businesses are eligible for temporary wage subsidies for a period of three months. The Small Business Wage Subsidy will be equal to 10% of the remuneration paid during the three month period, up to a maximum of $1,375 per employee and $25,000 per employer.

Both employers and individuals should stay informed of the available economic assistance in order to ensure their financial security during this period of economic uncertainty.

[1] Employment Standards Act, RSBC 1996 c 113.

[2] Collins v Jim Pattison Industries Ltd., 7 BCLR (3d) 13; Logan v Numbers Cabaret Ltd., 2016 BCSC 1473 at para 16

[3] Rennie Equipment Inc., Re, 2017 CarswellBC 2065 at para 48

[4] Chea v CIMA Canada Inc., 2016 ONSC 1937 at paras 3, 20-24; Employment Standards Act, 2000, S.O. 2000 c. 41, ss. 54, 56

[5] Rennie, supra at para 49; Chea, supra.