As the COVID-19 pandemic unfolds, it’s becoming increasingly clear that a health crisis can have substantial economic impact. Many employers and employees are feeling the crunch already. Most will feel it at some point as the situation continues to evolve.
With that in mind, it is important for employers and employees to understand their legal rights as they make decisions in light of COVID-19. In this article, we provide employers and employees with legal considerations to guide their thinking. Both the employer and employee section of this article will be relevant whether you own a business or work for one. The employee—employer relationship is really two sides of the same coin, with rights creating obligations and vice versa.
The information in this article concerns British Columbia businesses and employees. Different rules may apply to federally regulated businesses and businesses and employees in jurisdictions other than British Columbia. As the provincial and federal government continue to introduce new measures on an ongoing basis to mitigate the impact of the pandemic, the situation remains fluid.
March 24, 2020 Update
On March 23, 2020, the Employment Standards Act was amended to introduce two additional types of unpaid job-protected leave for employee: COVID-19 leave and personal illness or injury leave.
Under COVID-19 leave, an employee can take unpaid, job-protected leave related to COVID-19 if they’re unable to work for any of the following reasons:
- They have been diagnosed with COVID-19 and are following the instructions of a medical health officer or the advice of a doctor or nurse;
- They are in quarantine or self-isolation and are acting in accordance with an order of the provincial health officer, an order made under the Quarantine Act (Canada), guidelines from the BC Centre for Disease Control or guidelines from the Public Health Agency of Canada;
- Their employer has directed them not to work due to concern about their exposure to others;
- They need to provide care to their minor child or a dependent adult who is their child or former foster child for a reason related to COVID-19, including a school, daycare or similar facility closure; or
- They are outside of BC and unable to return to work due to travel or border restrictions.
COVID-19 leave is retroactive to January 27, 2020. If an employer terminated an employee on or after January 27, 2020 but before March 23, 2020 for a reason described above, the employer must offer the employee re-employment in the same or a comparable position
Upon request of an employer, an employee is required to provider their employer with reasonably sufficient proof that the employee is eligible for COVID-19 leave; however, an employer must not request a note from a medical practitioner or nurse.
Unlike COVID-19 leave, the new personal illness or injury leave is a permanent change to the Employment Standards Act. Under this leave, after 90 consecutive days of employment, an employee becomes entitled to up to 3 days of unpaid leave in each employment year for personal illness or injury. Upon request by the employer, the employee is required to provide the employer with reasonably sufficient proof of the illness or injury.
What should I consider if I am planning workforce adjustments?
Employers will be faced with many significant, and sometimes difficult decisions as the days and weeks progress. These decisions could include reducing employee hours, temporary layoffs or permanent workforce reductions. All these potential options are discussed below. However, there are general considerations for all employers no matter the decisions they are contemplating.
With all the disruption caused by COVID-19, keep in mind that many Canadian jurisdictions have requirements to provide notice to employees for changes to work hours or work schedule. These requirements apply whether you are increasing or reducing hours.
Employers should also be mindful that a change in hours or scheduling might, if substantial, be a deemed termination of employment (known as constructive dismissal). Additionally, depending on the effect experienced by the employee, a scheduling change may violate an employee’s human rights. . For example, employers have a duty accommodate employees on the basis of family status, to the point of undue hardship, when changing an employee’s schedule or hours of work. In short, this means that employers are restricted from causing a serious interference with a substantial parental or family duty, such as family care (subject to exceptions).
Finally, no matter what decisions you are contemplating as an employer, always make sure to consider your business’s relevant past practices, policy procedures or collective agreements. While we are in an exceptional period right now, the law still operates and applies, so make sure to proceed carefully.
What if I need to permanently reduce my workforce?
In a worst-case scenario, the financial impact of COVID-19 might force employers to look at permanent workforce reductions. Employers and employees should note that terminations under these circumstances are “without cause” terminations. This means that the applicable employment legislation, the common law (i.e. judge made law), and the employee’s employment contract apply.
To determine the employee’s entitlement, and the employer’s liability, follow the following flow chart:
The above flow chart is a simplification of a complex analysis, but it serves as a good starting point for determining employee entitlements and employer liabilities.
If you are an employer, you likely want the employment agreement and Employment Standards Act to apply. If you are an employee, you likely want the Employment Standards Act and common law to apply. The reason for this is because at common law, an employee’s entitlement to termination pay can be quite substantial. A number of factors are considered when determining the quantum, but generally speaking, a long-term employee who has been dismissed without cause is looking at months of termination pay. Its not unheard of for dismissed employees to be awarded two years of termination pay when the common law regime applies.
The common law regime can be contrasted with the Employment Standards Act. Under the Employment Standards Act, termination pay is determined by length of service, but caps out at 8 weeks after 8 years of service. What is important to know, however, is that the Employment Standards Act merely provides a floor, or minimum amount, of termination pay that must be paid to dismissed employees (except where dismissed for just cause). For this reason, the Employment Standards Act must be read together with the common law. In effect, the common law reasonable notice regime supplements the dismissed employee’s entitlements under the Employment Standards Act.
There is, however, a way to limit the amount of termination pay owed to dismissed employees. This is where the written employment contract comes in. Assuming the employment contract is valid and properly drafted, it can waive the employee’s entitlements at common law and limit the employee’s termination pay to the Employment Standards Act minimum requirements. Of course, the employment agreement could also set out some other termination pay entitlement, provided that it at least meets the minimum requirements of the Employment Standards Act.
At the time of writing this article, COVID-19 does not reduce or change these requirements in British Columbia. In fact, common law reasonable notice period requirements might actually be even greater right now, due to the economic uncertainty and difficulty dismissed employees may have securing new and comparable work.
What if I need employees to work overtime to keep my business going?
It is conceivable that many of your employees refuse to attend work or else are unavailable due to illness, self-isolation or enforced quarantine. In this situation, you may want your remaining employees to work overtime hours to help keep your business afloat. Employers can require that the employee will work overtime in excess of daily or weekly statutory limits on hours of work, provided the overtime is not excessive and the employees has at least 8 hours free between each shift. Most employees must be paid at the overtime rate for the overtime worked, even if on a salary. That being said, there are certain classes of employees who are not entitled to pay at the overtime rate but to be clear, this is classification made by law, not by contract.
Different overtime rules may apply to unionized employees – make sure to review the collective bargaining agreement for any differing requirements.
Can I unilaterally reduce employee hours so I can avoid workforce reductions?
In some cases, businesses will need employees to work overtime. For other businesses, the right option might be to reduce employee hours to avoid having to layoff employees. The right path forward will depend on the type of your business and the type of employees you employ. Employees whose work hours fluctuate (casual or part time employees) and are not guaranteed can likely have their hours unilaterally reduced without it being considered a layoff or constructive dismissal. However, this is assuming you do not reduce their hours to zero, in which case the employee could be considered to be laid off (see below for more on this).
For employees with regular hours, a significant unilateral reduction of regular hours may be considered a layoff and may expose the employer to constructive dismissal claims (which is a termination deemed by law).
Employers should also be alive to statutory obligations that might apply to them if they bring employees in to work but send them home prior to completing their scheduled work hours. Obligations arise in most jurisdictions to pay the employees their wage if the employee was scheduled to work more than three hours, arrived at work and was sent home before completing their shift.
What about temporary layoffs?
Unlike most other provinces in Canada, British Columbia’s employment law does not provide employers with a statutory right to lay off workers in the event of a work shortage. This doesn’t mean that employers can’t ever lay off workers – they can, but only in very limited circumstances. For a layoff to be permissible, there are three necessary elements:
- First, the layoff must not exceed 13 weeks. If it does, it is a termination deemed to have occurred on the first day of the layoff;
- Second, the employer must actually intend to recall the employee; and
- Third, the layoff must be authorized by one of the following:
- A clause in the employment contract permitting the employer to temporarily layoff the employee;
- The consent of the employee to the layoff; or
- the fact that layoffs are normal in the industry (e.g. due to the seasonal nature of the work)
If these requirements are met, the employment relationship is deemed ongoing notwithstanding that the employee has stopped working and receiving pay. Otherwise, if any of the requirements aren’t met, the employment is deemed terminated and the employee becomes entitled to termination pay.
In B.C., the definition of a layoff is a reduction of 50% or more of an employee’s weekly wages, averaged over the previous 8 weeks. Be mindful that temporary layoffs must be temporary. If you exceed the statutory limit, an employer can be deemed to have terminated an employee. In B.C., that limit is a maximum of 13 weeks of a consecutive 20-week period.
Temporary layoffs are generally unpaid, but this is subject to the employment agreement or collective agreement governing the employee – employer relationship. In certain circumstances, employees can be paid their vacation pay while on layoff.
Depending on the size of your business, you also may need to be aware of employer obligations for employee temporary layoffs (or terminations) of 50 or more employees within any two-month period. In B.C., the Employment Standards Act (Section 65) stipulates that group termination entitlements apply in these situations.
Employees are eligible to apply for Employment Insurance benefits while on a temporary layoff.
What if I get sick?
As discussed above, British Columbia has introduced new unpaid job protected COVID-19 leave and personal illness and injury leave. Employers are not obligated to pay for sick days under the B.C Employment Standards Act (though they may have agreed to do so in an employment agreement). Employees can choose to use vacation days to ensure continued income during an otherwise unpaid sick leave. If sick leave is part of the employment relationship, it may not be deducted from vacations, vacation pay, or statutory holiday pay. Those on sick leave may also be entitled to benefits from Employment Insurance (EI).
To be eligible for EI sickness benefits, employees must have worked 600 hours in the relevant qualifying period. Eligible employees will be paid 55% of earnings (up to a weekly maximum amount of $562). Employees can also receive medical employment insurance for a total of 15 weeks. To ease some of the burden on those affected by COVID-19, the Government has implemented some temporary changes, including waiving the one-week waiting period for individuals in quarantine that claim EI sickness benefits.
It is contrary to Human Rights legislation to adversely affect an employee’s employment due to an illness. This applies to COVID-19 as well. Employers cannot demote or terminate an employee for taking sick leave, subject to very limited exceptions. It is also improper for them to change your job duties or compensation due to your illness.
What if I’m sick and my employer tries to fire me?
Employers do have an obligation to keep the workplace safe, but dismissal is rarely the answer.
If you are dismissed because of an illness, your former employer will owe you termination pay and likely will have violated your human rights. Except in exceptional circumstances, an employer cannot terminate an employee for contracting COVID-19.
What if I choose to stay home from work?
A Developing Situation
The COVID-19 pandemic is an evolving situation, both globally and within each jurisdiction. The situation changes daily, so employees and employers should pay attention to federal, provincial and local government announcements. These announcements could affect the options available to both employees and employers. For example, the Federal government announced there would be a relief package for businesses affected by COVID-19 (details forthcoming) and is also adjusting the eligibility criteria for employees seeking to qualify for Employment Insurance. At the provincial level, Premier Horgan has indicated changes will be made to prevent layoffs, but details are unclear at the time of writing.
If you have any questions, or would like further information on any of the above, please don’t hesitate to reach out to the Segev team:
toll free: 1-800-604-1312
Business hours are Monday to Friday from 9am – 5pm