An employer must ensure a safe working environment. In addition, supplies or materials needed for ongoing business activities may be disrupted and demand for business services or products may be affected. Depending on the situation, it may be necessary to close a business location or reduce operations. If an employer has to reduce operations or even shut down during a pandemic, this would result in dismissal or a temporary layoff.
Under these circumstances, termination without cause may be the only viable option when no business or revenues are coming in due to the COVID-19 pandemic or when a declared emergency requires the business to shut down. An employer’s obligation for providing notice or pay in lieu of notice to employees as well as common law notice, will be governed by the specific facts of each case and applicable employment/labour standards legislation and depending on the employee’s employment contracts or in unionized workplaces, the collective agreement. There is no exception as a result of COVID-19 that would reduce these requirements.
Terminating employees during the COVID-19 pandemic will also not protect employers from a possible wrongful dismissal suit. In addition, several jurisdictions have announced that they are implementing passing legislation to provide employees with job protection with respect to several COVID-19 related absences (at the time of publication, details are not available). It is always recommended to consult with a lawyer when termination is not straightforward to ensure you are proceeding according to law and avoiding liability.
Employees who are terminated may be entitled to regular EI benefits or the CERB (discussed above), especially under these circumstances.
Also note that employers dismissing a certain number of employees may face the notice and severance requirements for group terminations under employment standards legislation. This requirement varies by jurisdiction.
However, in Alberta, effective April 6, 2020, employers are no longer required to provide notice of group termination to affected employees, unions or the Minister of Labour and Immigration when 50 or more employees are being terminated. They now only have to notify the Minister of Labour and Immigration when 50 or more employees are being terminated, as soon as practical.
2. Temporary lay-offs
A layoff is temporary and anticipates that the employee will be recalled to work. A layoff does not sever the employment relationship. In a unionized environment, you would simply lay off employees as per the collective agreement. For non-unionized employees, there might be an issue as to whether the layoff could trigger a constructive dismissal. However, it is important to note, that if the employee accepts the temporary layoff, he or she could be prevented from later claiming that they have been constructively dismissed.
Under normal circumstances, a lay-off, even if intended to be temporary, may result in constructive dismissal if it is not allowed by the employment contract or collective agreement or workplace policy, even if provided for in employment/labour standards legislation. Because basically, although employment/labour standards legislation contains temporary layoff provisions, the law does not give employers a general right to temporarily lay off employees. If not consented to in an agreement, you are basically reducing the employee’s hour to zero and stopping paying your employees when they are available and willing to work, therefore, unilaterally changing a fundamental term of the employment relationship.
If the power to perform temporary layoffs was not in a written agreement or communicated and acknowledge in workplace policy at the time of hire and an employer wishes to pursue this option, they should approach their employee with a written proposal for a temporary layoff. It is possible that the employee will choose this over termination, especially since employees can usually collect Employment Insurance benefits during a layoff and be reinstated by the employer after the period of temporary layoff expires. If an employer is able to demonstrate that an employee has accepted the temporary layoff, liability may be mitigated.
The requirements for notice, recall and the length of the layoff are still governed by applicable employment/labour standards legislation in the employers’ jurisdiction. Employees on temporary layoff are not entitled to pay or any termination entitlements. An employer must issue an ROE so that the employee can apply for EI regular benefits.
For example in Ontario, a layoff can only last for 13 weeks in a period of 20 weeks or less than 35 weeks in a period of 52 weeks, with certain conditions (an employer in Ontario can extend the duration of a layoff past the 13 week period noted above, provided that the employer, provides substantial payments to the employee, continues the employee’s benefits, if the employee receives or is entitled to receive supplementary unemployment benefits, or if the employee is called back to work within the approved timeframe under the applicable legislation). Layoffs that go on for longer than these time frames will be considered terminations and the employee will be entitled to termination entitlements.
That said, to ensure everything is done properly and because this is not a straightforward situation, it is always recommended to consult your lawyer before proceeding to avoid any liability.
It is important to note that during a declared emergency if the employer is ordered to close or reduce operation by health or other authorities, employers may be able to temporarily lay off employees without liability under employment/labour standards legislation. In the current environment, employees may be inclined to accept the temporary layoff and maintain their connection to their employer rather than triggering a termination.
Each case will be dependent on its own facts. A number of governments are proposing amendments to address the impact of COVID-19. We may see changes to help employers access temporary layoffs without fear of liability.