Employers across Canada are having to cope with one of the greatest, and most uncertain, crises of our time. The COVID-19 pandemic has required businesses to rapidly adapt to new challenges that were unthinkable even a few short weeks ago. What can businesses experiencing work shortages do to ensure they maintain their workforce and come back strong in the long term while reducing their workforce costs in the near term?
Some employers may be able to have their employees work from home, however, working remotely may not be a practical solution for all roles, or when employers are faced with work shortages triggered by the current pandemic. Organizations are therefore forced to consider other options to protect their workforce, while preserving their business.
There are other options to consider, before reaching the decision to terminate an employee. Please note that each of these options come with advantages, disadvantages, and potential risks to be aware of. Different jurisdictions may also have differing rules, this article focuses on Ontario legislation. It is prudent to obtain appropriate legal guidance before taking action to ensure liability exposure is limited. Outside of working from home, other considerations may be:
- Reduced hours of work
- Employer-imposed reduction of hours risks a claim of constructive dismissal.
- Reductions of 10% or less do not typically trigger a constructive dismissal claim.
- Employees may accept a reduction of hours as opposed to being place on reduced income through EI or being unemployed if they claim constructive dismissal.
- Work Sharing
- Applicable for eligible employers when business activities are reduced due to events beyond their control.
- Work sharing is available to both provincially and federally regulated employers.
- Eligible employees will receive Employment Insurance benefits as income support.
- Three-way agreement (between employee, employer, and Service Canada)
- Application typically needs to be submitted 30 days prior to the requested start date. Just announced as this article was being written, the application now needs to be submitted 10 days prior to the requested start date. Find up-to-date information here and additional information here.
- Temporary Layoffs
Temporary layoffs allow employers to lay off employees for a set period of time and to recall them once the disruption caused by COVID-19 has ended. Items to consider:
- Generally, only permitted if the provision was agreed to in an employment agreement (or it is an established past practice).
- Last for a specific duration after which they become terminations and termination packages will have to be considered.
- If an employee objects, a temporary layoff could amount to constructive dismissal triggering usual termination entitlements.
- Allow employees who qualify to receive Employment Insurance (EI) benefits while on layoff.
- Cannot place an employee who is currently on a protected leave on temporary layoff.
- Emergency Leaves of Absence
Various provincial governments have enacted legislation to declare the ongoing pandemic an emergency, allowing employees to go on an emergency leave of absence in certain applicable circumstances. Ontario employers can click here for additional information. Items to consider:
- Typically, employees must request to be put on an Emergency Leave.
- Employees on an Emergency Leave of Absence are job-protected, like other leaves. Employers therefore cannot change the employee’s wage, lay the employee off, or terminate the employee while they are on an Emergency Leave of Absence.
- Employees who qualify can receive EI benefits while on an Emergency Leave of Absence.
Stay on top of Latest Developments
The situation changes by the day, sometimes by the hour, with federal and provincial governments providing support to employees and employers through expanded access to Employment Insurance, new benefits such as the Canada Emergency Response Benefit and other economic supports. Always stay on top of latest developments by checking your local government website and news updates such as:
On March 27, 2020, the Government of Canada also announced a new wage subsidy for small and medium sized businesses, boosting the previously announced subsidy from 10% to 75%. At the time of writing, details on which businesses qualify are not yet available. Stay tuned for additional information.
Effective communication with your employees is prudent during this difficult time. The more support you show your employees will encourage them to continue working with your organization and will not proceed to seek legal remedies. Employees who understand the impact of COVID-19 on businesses will be more willing and agreeable to innovative solutions if it means saving their jobs.
Rules on leaves and Temporary Layoffs vary greatly across Canadian jurisdictions and each employer and employee’s situation is different and should be viewed individually. Unionized organizations will have different restrictions and should refer to their collective agreements. Before making any final decisions on how to deal with your workforce, please contact CEO Law at 416-712-7838 or email@example.com.
This article was written by HR and Employment Lawyer, Erika Verret. For more information, Erika can be reached at firstname.lastname@example.org.