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COVID-19

EMPLOYMENT LAW MATTERS

Carbert Waite LLP is a mid-sized litigation law firm located in downtown Calgary, Alberta. We have one of the largest groups of employment lawyers in the city, and our team of knowledgeable litigators are skilled advocates with experience in a wide range of employment law related matters. Our approach is always client centred and service minded.

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The outbreak of COVID-19 has introduced a range of unprecedented challenges across sectors. Carbert Waite is keeping on top of this rapidly changing climate and is dedicated to addressing client concerns, and providing up-to-date information and resources to businesses, employers, and employees. This page consolidates important updates and useful legal information in response to COVID-19.

If you’re involved in a COVID-19 related employment law issue, we invite you to review the resources below.

COVID-19 Employment Law

This is a challenging and emotional time for all Canadians, and many are unsure on how the COVID-19 outbreak will affect either their business or their employment. Carbert Waite’s team of employment lawyers are committed to helping our community navigate through this situation with the legal knowledge necessary to protect themselves and their loved ones. 

Whether you’re a business owner that may have to navigate mandatory vaccination policies, or an employee that is unsure if your employer is meeting the newest employment standard regulations, we can provide you with the legal insight you need to manage these circumstances.

In response to the COVID-19 outbreak, both provincial and federal governments are re-evaluating and amending workplace legislation with the goal of assisting businesses and Canadians vulnerable to layoffs and sickness. 

Please note that due to the ever changing nature of this situation, we are continuously updating this page. Therefore, the content should be considered accurate as of the date posted and earlier posts may not reflect the latest developments. The information on this page is not intended to be relied upon as legal advice. If you have any questions or require legal advice please contact any one of our lawyers.

Frequently Asked Questions

For Employers

Shutting down operations by itself will not absolve a business of its debts, including debts owing to employees for wages or amounts payable regarding termination of employment.  If a business is structured as a corporation and has no assets, including money, at the time of shut-down then it’s possible that an employee would be unable to collect any funds.  However, a corporation is not able to shut down, transfer or sell assets, and distribute funds to shareholders or new corporate entities while claiming an inability to pay employees.

Under the Business Corporations Act, Directors can be personally liable for up to six months’ unpaid wages owing to employees.  Wages does not include amounts payable in respect to terminations of employment, and is only as a remedy when work was performed but the payment for that work has not been made. Directors can also have liabilities to the government relating to amounts the company is obligated to withhold from wages for tax, CPP and EI.

Depending on the structure of your business, it is possible that an owner could be personally liable for payments related to termination of employment amounts owing to employees.  Under a typical corporate structure, shareholders are generally not liable for amounts owing to employees unless a payment to shareholders, such as a dividend, was made improperly.

It would require very unusual circumstances for a manager to become liable to an employee for unpaid wages; such as a manager engaging in fraudulent acts to their own benefit and to the employee’s detriment.  Presuming a manager is acting in good faith, then they would not be held liable for debts owing by the corporation to any employees.  However, if a manager is also a director, then director liability issues could result in personal liability issues arising.

One of the factors in assessing the notice period for termination of employment continues to be the employee’s ability to mitigate the damages from the loss of employment by finding comparable employment. The economic impact of the pandemic is going to make it very difficult for individuals in many business sectors to find other employment. This is likely to result in longer notice periods for termination of employment. Refer to this blog post for more details.

It depends on how the wage reduction was implemented and communicated to employees. If it was implemented on an indefinite basis with the employees consent and no promise was made to reinstate the earlier salary, or to pay any eventual severance on the earlier salary, then on termination, pay in lieu of notice based on the new (reduced) salary would be owing at the reduced salary.

Under the Employment Standards Code, earnings are not permitted to change from the time notice of termination is given, regardless of whether work is performed or not.  However, it may be possible to implement a change to the structure of a working notice period if you sought to delay when the working notice was performed.  Because this would be an unusual arrangement, it would be most effective if used with the employee’s agreement.

It will depend on the terms of the contract. If the contract gives a right to terminate before the end of the term, then you can do so as long as you give notice in accordance with the terms of the contract.

If there is no right to early termination, they you may not be able to lawfully terminate the contract before the end of the term. Be sure to review the terms of the contract for any provisions that would cause the contract to be automatically renewed if notice of termination is not provided by a certain date and make sure you comply with the notice requirements.  Alternatively, you may be able to negotiate an early termination with the contractor.

Refer to this blog for a summary of benefit programs available to employers

If the alternative is termination of employment, many employees will be prepared to agree to a reduction in pay.  Notices or agreements for reduced pay should be in writing and should clearly state the amount of the reduction. If possible, the agreement should also specify how long the reduction will be in place or alternatively, when the reduction will be reassessed.  Any other forms of compensation being adjusted should also be addressed in the notice or agreement.

 

If a reduction is being implemented with short or no notice, without the employee’s agreement, liability issues will need to be considered.

A unilateral change in the terms of employment, including a reduction in pay, can constitute constructive dismissal which results in an obligation to provide notice or pay in lieu of notice of the change. If the reduction in compensation represents less than 10% of total compensation, the risk of it being found to constitute constructive dismissal is typically low.

The pandemic does not relieve or eliminate an employer’s responsibility to comply with human rights and employment standards legislation. A temporary layoff or permanent termination of employment of a pregnant employee could constitute a breach of human rights. A failure to allow an employee to return to work following a maternal or parental leave would likely breach human rights and employment standards legislation. If a pregnant employee is laid off or her employment is terminated as part of a larger layoff or workforce reduction, and the decision is not selectively impacting pregnant employees, or any other category protected under human rights legislation, then there is a good chance the action will found to be reasonable and justifiable and not a breach of human rights.

The pandemic does not relieve or eliminate an employer’s responsibility to comply with human rights and employment standards legislation. A failure to allow an employee to return to work following a medical leave would likely breach human rights and employment standards legislation. If the workplace has been required to close as a result of pandemic restrictions then the obligation to return the employee could be deferred until the workplace reopens. If the workplace’s functioning has been significantly reduced and/or modified in light of the pandemic, that might also justify deferring an employee’s return to the workplace following a medical leave. It would also change the assessment of the duty to accommodate and the test for what constitutes undue hardship for an employer.

No. However, decisions should be made carefully and in a way that is not discriminatory. For example, a higher wage reduction for executives than for other employees would be acceptable. Careful consideration should be given to ensure wage reductions are not disproportionately impacting employees of a certain gender or place of origin, or individuals with disabilities or family caregiving responsibilities.

For Employees

Refer to this blog for a summary of benefit programs available to employees.

Refer to this blog for information about what is considered in determining a fair package.

Even in these circumstances, employees whose employment has been terminated have an obligation to try to minimize their damages by finding other employment. This requires making a good faith effort to do things like monitor job postings for roles that fit your qualifications and experience and maintaining contacts within your industry.

An employer can ask for a release now but a release will not be enforceable unless the employer has complied with its obligations to complete the agreed length of salary continuance.

Alberta has recently amended legislation relating to temporary layoffs. These changes are summarized here. The maximum length of a temporary layoff is now 120 days. If you are not recalled within 120 days, it will be deemed to be a termination of employment triggering obligations to pay termination and severance pay. If public health restrictions are further extended, we expect the province may further extend the maximum length of a temporary layoff.

This will depend on the terms of your employer’s benefits coverage with the insurer. You should contact your employer’s human resources department to confirm this.

If your employer does not recall you before the end of the maximum length of a layoff, your employment will be deemed to have been terminated. You will be entitled to notice or pay in lieu of notice under employment standards legislation and under the common law. The amount of notice will depend on your specific circumstances. You can refer to this blog for more information.

Alberta’s Employment Standards Code only allows the layoff to be extended beyond the new maximum of 120 days if the employer has the employee’s consent and the employer pays for the employee’s pension or other benefits plan. If you do not consent, the layoff cannot be extended, even if they cover your benefits.

The pandemic does not relieve or eliminate an employer’s responsibility to comply with human rights and employment standards legislation. A temporary layoff or permanent termination of employment of a pregnant employee could constitute a breach of human rights. A failure to allow an employee to return to work following a maternal or parental leave would likely breach human rights and employment standards legislation. If a pregnant employee is laid off or her employment is terminated as part of a larger layoff or workforce reduction, and the decision is not selectively impacting pregnant employees, or any other category protected under human rights legislation, then there is a good chance the action will found to be reasonable and justifiable and not a breach of human rights.

If your employer does not recall you before the end of the maximum length of a layoff, your employment will be deemed to have been terminated. You will be entitled to notice or pay in lieu of notice under employment standards legislation and under the common law. The amount of notice will depend on your specific circumstances. You can refer to this blog for more information.

Yes, there is no restriction on seeking alternative employment during a temporary layoff. If you are successful in obtaining other work during a temporary layoff it might impact your eligibility for federal or provincial income support programs implemented in relation to the pandemic.

Also, if you are recalled by your employer, and refuse to return to work because you have found other employment, you will lose any entitlement to termination or severance pay.

It depends on how significant the reduction is. A unilateral change in the terms of employment, including a reduction in pay or hours of work, can constitute constructive dismissal which results in an obligation to provide notice or pay in lieu of notice of the change. If the reduction represents less than 10% of total compensation, it is unlikely to be found to constitute a constructive dismissal.

Not necessarily. If an employee accepts a reduction without a written agreement from the employer that full compensation will be reinstated at a certain time, then the employer will have no obligation to restore full compensation.

We are happy to speak with you about the specific conditions of your employment related matter. Our team of experienced employment litigators have access to the current COVID-19 related workplace legislation, and can help you determine the best course of action.
Carbert Waite LLP