THE RECOVERY – Testing Employment

From that, that shall remain nameless

Steve Mendelssohn is an employment lawyer with his practice; Watershed Law based in Oakville and is a long time collaborator of The Human Well. We asked Steve to talk about some of the employment law issues that we can expect to have to face. 

The legal and human resources communities have in the past, dealt with numerous business-wide disruptions and can predict with accuracy legal pitfalls and risks that a  business owner can weigh to determine the best course.  Then, along came the global pandemic the first experienced in our lifetimes and providing advice and guidance became uncomfortable, unpredictable and fraught with new considerations.

Our common law model operates on the basis that prior court rulings establish the rules and principles that govern our workplaces. We are now in new territory without precedent, making concrete advice on some aspects difficult. However, there is guidance based on past workforce planning scenarios, that can be provided:

1) Lay-offs

An unprecedented number of Canadians have received layoff notices in the last few weeks.  There are essentially two types of layoffs.  The first is permanent in which the Employer terminates employment; a permanent lay off.  Nothing has changed related to permanent layoff as a tool to manage headcount reductions.

The second is a “temporary layoff” of short duration. Before COVID a short-term or temporary layoff could trigger claims for constructive dismissal unless they were part of a union agreement or there was an express provision in the employment agreement.  Courts have determined that when an employer initiates a temporary-layoff, without pay, that this is a material, unilateral change to the terms and conditions of employment i.e. a potential constructive dismissal.

Damages for constructive dismissal are the same as for wrongful dismissal which can create significant employer liability. While the risks associated with constructive dismissal have not changed, many of us in the legal community have advised clients that in light of the pandemic, it is unlikely that a court would apply the same standard.  An employer could argue that through no fault of theirs or the employee the employment agreement could not be performed and therefore, the contract has become frustrated. If this argument is held to be successful, employers would not be required to pay notice or severance.

Employers have decided to temporarily layoff employees in the hope that they will be recalled to work once the economy reopens.  Ontario employment law has provisions dealing with temporary leaves with various conditions depending upon the length of the layoff. Temporary layoffs that adhere to the statutory provisions will not violate employment legislation and if a layoff lasts longer than legally permitted, termination of employment will be deemed to have occurred.

Collective agreements typically contain layoff and recall provisions for unionized employees.

2) Voluntary Measures

Employers may agree to employment agreement changes with employees in which case they preclude an employee from arguing constructive dismissal because the change is not unilateral.  Voluntary agreements might include:

1. pay reductions;
2. reductio in weekly hours;
3. rotating shifts (e.g., one week on, one week off);
4. unpaid leaves of absence (furlough); and
5. work sharing agreements

Any voluntary measures should be captured in a written agreement and generally involve  some consideration that the employer has provided to employees in exchange for these agreements

3)  Work Sharing

The federal government has a work-sharing program requiring employee agreement to “share” up to 60% of their workweek. Service Canada will provide employment insurance and benefits to make up some or all of the employee’s lost income in such agreed to arrangements.

Work sharing arrangements are subject to application, other qualifying criteria and reporting requirements. Work sharing arrangements have been extended to 76 weeks from the previous 38 weeks.

4) The Return to Work

Employers considered “essential services” and those re-opening in the future may experience employee reluctance to return to operations.  Apart from the legitimately sick or those taking care of family, some employees may simply claim to be too scared to return, assuming that they can continue to collect the Emergency Relief Benefit ($2000.00 p.m.).  If the workplace is safe, and appropriate safety measures are in place, it will be difficult for an employee to refuse to attend the workplace.  Employers can take a hard line and schedule return to work dates for those employees, advising them that their failure to attend will be deemed to be a quit or abandonment.  Employers are expected to assist with policing the emergency benefit provisions.  Open communication and rational management practices will assist employers through these occurrences.

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Photo by Olesya Yemets on Unsplash

Need a Yoda? We can help. We have seen a catastrophe or two and know a thing or two and prior solutions will continue to have a role. In the great recession, we worked without fees supporting clients through difficult times. We plan to do so again through telephone consultations, The Recovery blog, The Business Health Council and our Advisory Board on Demand; a service to CEOs facing challenges that don’t have an advisory board.