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COVID-19: A Practical Overview of Employer Options

By Ryley Mennie + Lou Poskitt + Connor Levy - April 23, 2020 under MT+Co.

Navigating Workplace Options in 3 Steps

In response to the serious economic symptoms of COVID-19, organizations are having to make the most difficult kinds of business decisions – the human ones.  As a follow-up to our initial webinar, we are providing a practical guide regarding the general options available to employers to respond to the pressures arising from COVID-19, effectively re-tune their operations and, where necessary, properly restructure their workforces.

Step 1 – Assess Short-to-Medium Term Business Needs

While a specific time frame cannot be determined, the World Health Organization and public health authorities expect the COVID-19 pandemic, and the associated restrictions on physical distancing and quarantine, to last for months or longer.  Given this uncertainty, businesses will need to assess:

  1. their need and ability to modify how services or products are provided, taking account of workplace and workforce arrangements; and
  2. core business and staffing needs for at least the next three-to-six months.

Given the challenges and economic uncertainties associated with the pandemic, businesses will need to walk a fine line between sustaining operations and making necessary workforce adjustments now, while retaining key talent and other assets to permit the enterprise to emerge quickly from the current challenges.

Step 2 – Consider Workplace Adjustments Options

Once an initial assessment has been completed, consider what type of business adjustments are required.

To help you sift through the overwhelming amount of information currently circulating and the evolving benefit arrangements offered by the Federal and Provincial governments, below is a general summary of the options available to employers (in no particular order of importance):

1. Unilaterally restructure the workplace and workforce (within reason)

Employers may need to establish safe remote-working alternatives or other workplace arrangements to ensure that employees can continue working safely.  We provided general guidance on taking steps to creating a safe workplace and facilitating remote working arrangements in our previous blog post.

WorkSafeBC has also provided guidance, including employers’ obligations to ensure a safe remote workspace.  While an employer retains some discretion to modify workplace arrangements unilaterally, it is important to understand that, certain unilateral changes by an employer can give rise to claims for constructive dismissal.

However, entering into negotiations, which is next on this list, with employees can help mitigate constructive dismissal concerns when making significant changes to job duties, hours and pay arrangements.

2. Negotiate with employees

In contrast to unilaterally imposing changes, negotiating modifications is often the most practical approach – when both parties can agree, there is less opportunity for dispute and the workplace and constructive dismissal claims are avoided.  Generally speaking, an employee needs to be presented with options to make this work, which may be:

    1. accepting a temporary layoff – which maintains employment, enables the employee to apply for EI, and provides both parties with a measure of job security;
    2. agreeing to a modified work structure e.g. reduced hours/pay, different duties – which provides sustained services from an employee and potentially more earnings than from EI, plus a continued active work relationship; or
    3. termination without cause – in which case statutory and contractual obligations for notice, pay in lieu and/or severance need to be complied with.

Practical Tip: in any case of continued employment, it is imperative that the employee confirm their decision in writing.

3. Temporary layoff

It is important to note that, under the current legal framework, unless permitted by contract, expressly or impliedly, a temporary layoff amounts to a constructive dismissal at common law and a termination of employment under the Employment Standards Act [ESA].

However, the reality is that many businesses need to make these difficult decisions right now. While:

    1. the Canada Labour Code [CLC] permits an employer to impose a temporary layoff (which does not eliminate the potential for a claim of constructive dismissal); and
    2. the BC Director of Employment Standards has recently provided non-binding guidance regarding potential exceptions to termination notice/pay obligations that may apply if a provincially-regulated employer imposes a temporary layoff,

it is fundamentally uncertain how the courts and tribunals will approach claims of constructive dismissal based on necessary temporary layoffs in the face of COVID-19.

Provincial and federal employment standards legislation contain provisions that govern the terms of a permissible temporary layoff a provincially or federally regulated employer may implement, including the length of the layoff.  We strongly encourage you to review the applicable legislation and confer with legal counsel in the event you are having to consider temporary layoffs for your business.

Practical Tip: Records of Employment

    • – employees who are being temporarily laid off for business reasons – mark “CODE A”
    • – employees being temporarily laid off on account of a COVID-19 related illness or quarantine – mark “CODE D”.

4. Termination (on notice or with pay in lieu)

This is rarely an ideal option, however, employers may be forced to take drastic action in these uncertain times.  Any termination occurring under these conditions will likely be on a without cause basis, meaning that an employee would be entitled to notice, or pay in lieu of notice (and severance pay) in accordance with applicable employment standards legislation (provincial or federal) and their contract of employment.  Employers who are considering more significant workforce reductions should also be aware of federal and provincial group termination notice requirements when certain numbers of employees are terminated within a certain time frame.

Again, we note that there may be relief, at least under the ESA, for employers who are forced to make workforce reductions due to COVID-19, though this should be approached with caution.  In addition, federally-regulated employers will need to be more cautious in approaching without cause terminations in light of a CLC provision that protects non-management employees with more than 12 months’ service against without cause terminations, save for very particular circumstances.

5. Federal “work-sharing” program

Employees can agree to share reduced duties and receive EI benefits at a reduced salary, which does not count against the EI payments.  Essentially, this program can complement the negotiation option (#2 above), in that EI payments will make up some of an employee’s reduced wages.  However, there are a number of details associated with this and the plan needs to be registered with Service Canada.

As will be discussed below, the federal government has announced that all EI claims that relate to COVID-19 will be processed through the Canada Emergency Response Benefit as of March 15, 2020. Service Canada’s website currently indicates that employees who are claiming EI benefits in conjunction with the Work Sharing program remain entitled to EI benefits, and not CERB.

More details can be found here and here.

6. Federal employee and employer support programs.

The number of available options has rapidly expanded over the past several weeks and each day seems to bring a new announcement from the Federal government.  The following is intended to be a refresher on the options available to businesses, as well as to employees and contractors, who have been terminated or temporarily laid off due to COVID-19.

Employee-focused options

Canada Emergency Response Benefit (“CERB”) The CERB will pay out $2,000 per month for up to four months to eligible individuals. To qualify, individuals must have stopped working due to COVID-19 and been without any form of income for at least 14 consecutive days. Critically, the CERB is available to both employees and self-employed individuals (i.e. contractors).

The federal government has announced that anyone who is eligible for regular EI benefits or sickness EI benefits as of March 15, 2020 will receive CERB payments rather than EI benefits.

Applications for the CERB opened on April 6th and the application can be found here. Individuals will be required to re-apply for the CERB after each four-week period if they wish to receive the full 16 weeks’ of CERB payments available.

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Employment Insurance (“EI”) Benefits – Regular EI Benefits Regular EI benefits remain available to employees who have been dismissed or laid off due to a lack of work as a result of COVID-19. A qualifying employee can receive up to 55% of their insurable earnings, to a maximum of $573 per week. However, employees who apply for regular EI benefits for any eligible claims after March 15, 2020, will receive CERB payments (of $500 per week) and not EI benefits. Employees who have exhausted their sixteen week CERB payments and are still unemployed may then become entitled to regular EI benefits.

An overview of the qualifying requirements and the application form can be found here.

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Employment Insurance (“EI”) Benefits – EI Sickness Benefits EI sickness benefits are available for individuals unable to work of account of being diagnosed with COVID-19, or required to quarantine.  A qualifying employee can receive up to 55% of their insurable earnings, to a maximum of $573 per week. However, employees who apply for EI sickness for any COVID-related eligible claims after March 15, 2020, will receive CERB payments (of $500 per week) and not EI benefits. Given that EI sickness benefits cover a period of 15 weeks, which is shorter than an employee’s CERB entitlement, it is unclear if employees would be entitled to EI sickness benefits after exhausting their CERB entitlements.

An overview of the qualifying requirements and the application form can be found here.

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BC Emergency Benefit for Workers This one time, tax-free $1,000 payment has been announced by the BC government for BC residents whose work has been affected by COVID-19. BC residents who receive CERB payments are eligible for the BC Emergency Benefit for Workers. Details remain sparse, but updates (when they become available) will be found here.

 

Employer-focused options

Canada Emergency Wage Subsidy (CEWS) Keep an eye on our wage subsidy blog post for the latest updates on the Federal government’s proposed 75% wage subsidy. The application portal is expected to open on April 27, 2020. Further details on the CEWS can be found here, including how to calculate entitlement here.

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Federal Supplemental EI Benefit Program Generally, the Supplemental Unemployment Benefit (SUB) allows employers to top up a laid off employees’ salary over EI benefits, without the top up affecting benefit entitlement (to a maximum annual salary of $67,750 including wages, EI benefits and top up amounts). There is a registration requirement and certain details associated with this program, but, if available, it provides an advantage in being able to retain key staff on close to full salary without the employer having to pay the full amount.

The federal government has not issued any guidance about whether or not SUB plans and the accompanying top ups to EI benefits can be applied to CERB payments. As noted earlier, all COVID-related EI claims are being funneled through the CERB program. It is currently not certain whether employers can top up EI-eligible employees who are instead receiving the lesser CERB payment, even if there is an approved SUB plan in place.

More information can be found here.

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10% Temporary Wage Subsidy (TWS) Allows eligible employers to reduce their payroll remittance up to $25,000. Details on eligibility and how to claim this subsidy can be found here. For those employers who are eligible for both the TWS and the CEWS, any amount claimed on the TWS should be used to reduce the claim made for the CEWS.

 

Step 3 – Implement Workforce Adjustments

Of course, how to approach your workforce and business considerations from COVID-19 will be unique to your workplace, workforce and industry.  Generally speaking, however, we offer the following suggested guidelines:

— Review applicable policies and employment contracts to understand the scope of decisions that your organization may be able to make without obtaining employees’ agreement;

— Align leadership around the changes that need to be made – a consistent, calm and reassured top-down message that reflects an “in this together” approach to the crisis, including financial sacrifices that may need to be made, will help mitigate stress and potential resistance to the changes that need to be implemented.

— Ensure consistent internal and external messaging to stakeholders regarding your business’ response to COVID-19, and ideally from a single source. This will help to reassure those within and outside an organization that matters are in hand and the business is taking steps to emerge from this crisis stronger than before.

— Ensure legislative/administrative requirements are in hand with applicable governmental authorities, when seeking a government support program, and before commitments are made to staff.

— Ensure discussions and agreements with employees are documented in writing and include sufficient flexibility to resume the status quo and/or to revisit the circumstances to address developments going forward.

Last Thoughts

It is important to keep in mind that this is an unprecedented situation.  The above suggestions represent an array of the general options available to Canadian employers.  However, the reality is that there is no one-size-fits-all approach that can be neatly applied to each workplace.  The best solution must be determined on a case-by-case basis, taking into account the unique nature of your workplace, your workforce and your industry.

 

Want More

We will continue to keep you updated as more details emerge.  If you have any questions about your workplace and managing responses to COVID-19, feel free to contact Ryley Mennie, Lou Poskitt or Connor Levy from our Workplace Law Group.



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