This post is current as of May 7, 2020. Since the situation is rapidly evolving, it is important for employers to continue to check government websites and other information sources to ensure they make decisions with information that is as up to date as possible. The information contained in this blog is relevant only to non-union workers in provincially regulated industries covered by the Employment Standards Act.
On March 23, the BC legislature enacted several changes to the Employment Standards Act. As at the date of this article, these changes have not reduced nor eliminated an employer’s obligations when laying off employees due to a decrease in available work. With limited exceptions, employers must continue to provide notice or pay in lieu of notice to employees.
Under section 63 of the Employment Standards Act, the amount of written notice or pay that must be provided on termination is based on how long an employee has been employed. Further information on applicable notice periods or pay in lieu of notice can be found here.
There may be additional common law obligations on termination of employment. In many circumstances, these common law obligations may be considerably more onerous than what is stipulated under the Employment Standards Act. If you are considering laying off employees and are unsure of your legal duties, you should consult legal advice.
Layoffs
The term “layoff” refers to a temporary cessation of employment where there is the possibility or expectation that the employee will return when work becomes available. In a non-union setting, layoffs are only permitted if expressly or impliedly permitted in an employment contract. If no such right is provided for in the contract, employers may risk a wrongful dismissal action.
The BC Employment Standards Act permits temporary layoffs for a period of up to 13 weeks in any period of 20 consecutive weeks without triggering termination obligations. However, the temporary layoff provisions in the Employment Standards Act only apply if the employment contract provides the authority to do so.If you are unsure whether an employment contract provides the right to layoff an employee, you should consult legal advice.
Reduction of Hours
Reducing an employee’s hours may result in a deemed layoff that triggers an employer’s termination obligations. Under the Employment Standards Act, a layoff is triggered if an employee earns less than 50% of their regular weekly wages. Under the common law, an employer may trigger termination obligations if an employee’s hours are reduced by as little as 5%.
Wrongful Dismissal
The decision to layoff an employee or reduce their hours may amount to constructive dismissal. Terminating an employee without cause, including through constructive dismissal, can provide the basis for a legal claim of wrongful dismissal, which may cause an employer to be liable to pay an employee for a significant amount of damages. Whether an employer’s actions will be sufficient to support a claim of wrongful dismissal is case specific. If you are considering laying off on employee or reducing their hours and are concerned about a potential claim for wrongful dismissal, you should consult legal advice.
Although the employment termination obligations under the Employment Standards Act continue to apply, the following provide examples of how employers may seek to avoid the legal consequences associated with claims of wrongful dismissal.
Exceptions under the Employment Standards Act
Section 65 of the Employment Standards Act provides various exceptions to an employer’s termination obligations, including if a contract becomes impossible to perform due to an unforeseeable event. Employers may not be required to provide employees notice or pay in lieu of notice for layoffs that are directly related to COVID-19, provided that there is no alternate way for an employee to perform their work. This does not apply to every situation. For example, it would not apply if an employee is able to perform some or all of their duties while working remotely, or if the layoff is related to a decrease in customers. It may therefore be risky for an employer to rely on this exception.
Frustration
Frustration is a common law doctrine similar to the statutory exception under section 65 of the Employment Standards Act. It entitles an employer to treat an employment contract as at an end if an unforeseeable event causes the employment contract to become impossible to perform. Whether COVID-19 meets the test for frustration is yet to be determined. Employers should therefore be cautious if relying on this doctrine to avoid termination obligations as a result of COVID-19.
Employee Agreements
If an employment contract does not provide an employer the right to layoff or reduce an employee’s hours, the employee may agree to waive their statutory or common law rights to termination pay and accept a voluntary layoff. A change to an employment agreement normally requires consideration of some sort. Forbearance can be that consideration. The agreement should be made in writing. If you are considering entering agreements with employees in order to avoid termination obligations, you should seek legal advice.
Government Assistance
The government has announced several measures to assist employers in maintaining employment relationships, including wage subsidies. Up-to-date information on wage subsidies available to employers can be found here.
Human Rights Considerations
On April 4, BC’s Human Rights Commission provided guidance to employers on their continuing obligations under the BC Human Rights Code. A link to the full statement can be found here. In the statement, the Commissioner confirmed that COVID-19 amounts to a disability that is protected by the Code. Layoffs related to an employee’s exposure to COVID-19 may therefore be prohibited, and employers should attempt to accommodate employees who may have contracted or been exposed to COVID-19 wherever possible.
If you or your business needs assistance navigating British Columbia’s employment laws to respond to the COVID crisis, or otherwise, contact any of the lawyers in Owen Bird’s Employment Law practice group.