PART 1: COVID-19 and the Workplace: Key Considerations for Employers

*This is part one of SV Law’s COVID-19 and the Workplace: Key Considerations for Employers. It will be most helpful to read part two here when you have completed reading this.

On March 11, 2020, the World Health Organization (WHO) declared the outbreak of the novel coronavirus (COVID-19) a global pandemic.

On March 17, 2020, the Ontario provincial government issued an order declaring a state of emergency in response to COVID-19 under s. 7.0.1(1) of the Emergency Management and Civil Protection Act. 

Most Ontario employers will be directly or indirectly affected by the COVID-19 pandemic which poses a range of challenges in the workplace. As the effects of COVID-19 are evolving on a daily basis, it is important that employers adapt, stay informed, and regularly review their response to the pandemic.

KEY POINTS TO CONSIDER 

1. Unless you have an employee’s consent to a layoff, which can be implicit (for example, in an industry with a history of permitted layoffs), or explicit (i.e., confirmation in writing), there is a risk that the layoff is legally improper. If this is the case, the employee may be able to sue for damages for constructive wrongful dismissal because the employer changed their job or income and benefits in a significant manner without their consent. That said, an employer who has been ordered to close by the government will likely not have to justify employee layoffs or other work reduction programs as the decision has come about due to circumstances beyond the employer’s control in a crisis situation.
2. Employers have an ongoing and serious obligation to keep their workplace free of hazards that could affect the health and/or safety of all workers. This means that an employer must be proactive in assessing whether or not the workplace creates a risk of employees contracting and/or spreading COVID-19 and take steps to reduce that risk.
3. An employer must make sure that it is reviewing and abiding by its workplace policies when dealing with employees during the COVID-19 pandemic. Employers will likely need to develop new policies that address pandemic-specific issues that arise in the workplace. 
4. As the COVID-19 pandemic evolves, the provincial and federal legislatures have been introducing various amendments to the employment legislation to protect the health, safety, and job security of workers. It is important to determine if your business is provincially or federally regulated (from an employment perspective) so that you can stay informed about the ongoing amendments to the employment legislation that applies to your industry. 
5. There are a number of new and evolving programs to assist employees who are affected by COVID-19. Employers should be familiar with these programs so that they can make informed decisions about their business and their employees. 
6. It is not a violation of Ontario’s Human Rights Code for an employer to layoff an employee because there is no work available due to the COVID-19 crisis. Similarly, it is not a violation of the Human Rights Code to require a sick employee to stay home for a period of time that is consistent with public health recommendations in the event that an employee is exposed to COVID-19, or if they have recently travelled. 
7. Job-protected emergency leave is available to employees who are in isolation due to COVID-19, to those who need to be away from work to care for children due to school closures, or to care for other relatives. Employers are not generally required to pay employees during an emergency leave. Further, employers cannot require an employee to self-isolate unless the employee is required to do so as per government direction. 

TEMPORARY LAYOFFS DURING THE COVID-19 CRISIS

A layoff is a period of time when an employer temporarily withdraws work and income from an employee. Despite this interruption of work and compensation, the employment relationship remains ongoing. It is important to note the term “layoff” is distinct from “termination” or “dismissal”, although these terms are often incorrectly used interchangeably. Unlike a termination or dismissal, a layoff is not – and does not – lead to the end of the employment relationship, until the employer decides not to recall the employee or the layoff period ends without a recall. 

In unionized workplaces, a bargained collective agreement will dictate the framework for temporary layoffs of a unionized workforce. 

In a non-unionized workplace, an employer needs to be cautious about implementing unpaid temporary layoffs. While Ontario’s Employment Standards Act, 2000 sets out various rules about temporary layoffs, the courts have decided those sections do not give an employer an automatic legal right to layoff an employee (especially without pay). The only way that right exists, without being capable of being challenged by the employee, is if the employee has consented to the layoff implicitly or explicitly. 

The right to place an employee on an unpaid temporary layoff must be agreed upon by the parties, usually in the written employment contract. Layoff provisions are most commonly found in employment contracts for employees who work in seasonal, casual, or part-time positions. Many employers do not have a layoff clause in their employment contracts, as the need for a layoff was not anticipated or expected by the employer or the employee at the time of hiring. 

If an employee has an employment contract with no-layoff provision and there is no history of prior layoffs, absent written consent of the employee to the layoff it is possible that a unilateral notice of a layoff will amount to an act of “constructive dismissal”. The employer could then be liable for the losses and damages able to be claimed by the employee. 

Practically speaking, in the context of this COVID-19 crisis, it is possible that employers will be excused from the legal ramification of placing employees on temporary layoffs without the contractual right to do so. Although it would constitute constructive dismissal in normal times, the legislature or the judiciary may determine that such layoffs are not constructive dismissal because employers are being forced to close or are doing so to protect their employees’ health and safety.

In the context of a pandemic, employees are less likely to challenge a layoff if it is implemented by the employer cautiously and sensitively. As such, most employers will benefit from a well-thought-out layoff plan and open communication with their employees leading up to and during the layoff.

Step-by-Step Guide To Temporary Layoffs 

1. Review the Employment Contract: Review the written employment contract or hiring letter (if any) and determine if you have a contractual right to place your employee(s) on a temporary layoff. In normal circumstances, the right to place an employee on an unpaid temporary layoff must be agreed upon by the parties, usually in the written employment contract. Consider if it is feasible for you to obtain written consent from the employee.

2. Consider Practical and Legal Consequences: Even if it is legally permissible, a temporary layoff may prompt an employee to look for new employment. As such, employers should consider whether they are prepared to take the risk that the employee may not return once recalled. The upside of that scenario is that the employer will not owe any termination or severance pay to an employee who will not come back to work because they have another job.

3. Consider Alternative Options: Consider if the federal work-sharing program or a reduction in employee hours can serve as an alternative to a layoff. The Government of Canada’s website contains more information about the work-sharing program which has been recently reformed in response to the COVID-19 pandemic. Note that employers need to be cautious when reducing an employee’s hours, as such a change (without employee consent) can also give rise to the same concerns explained herein regarding claims for constructive dismissal. If feasible, obtain employee consent to a temporary reduction in pay.

4. Review Sick Leave Policies: Review your personnel policies regarding sick leave and sick days and make sure they are strictly applied and followed. If any employees to be laid off are complaining of being ill, they should go on sick leave until able to return to work instead of being given a layoff notice.

5. Consider Employee Compensation During the Layoff: Decide what income continuation or top-up, if any, will be made available to employees during the layoff and/or for how long employees will continue to be paid during the layoff.

6. Organize the Layoff Process: Decide how the temporary layoff arrangements will be communicated to your employees. Consider engaging in active group communication with them to get their input before you decide what the layoff will involve. 

7. Communicate the Layoff Arrangement in a sensitive and thoughtful manner and seek agreement and consent from each employee, if possible. In every workplace setting, the employer should (at a minimum) ensure that some written correspondence is being sent to employees which emphasizes that the health and safety of the employees was the primary consideration in coming to the decision to layoff. If you are being forced to close due to government directives, highlight this fact in your correspondence to your employees. It is important to advise your employees in writing of the following important information:

• When the layoff will commence and end, at the latest (13 or 35 weeks later) and that their job is not being permanently terminated. Whether the employees will continue to be paid during the layoff and for how long, or if not, communicate what their options are in terms of government assistance. If employees will not be paid during the layoff, consider directing them to the Employment and Social Development Canada’s website where they can access more information and employment insurance benefits.
• Whether employees will be permitted to use paid sick leave (if any) or accrued paid vacation time (if any) to delay the start of their temporary layoff without pay.
• Request up-to-date contact information so that you can continue to communicate with the employees during the layoff, or when you are able to recall them back to work. Provide laid-off employees with ongoing monthly communication about how the business is doing and when they may be recalled to work. Be sure to also include the contact information for someone they can contact with their questions. 
  

8. Issue a Record of Employment (ROE): Work with your payroll administrator to issue Records of Employment (if needed). You do not need to issue an ROE until your employees experience an “interruption of earnings”. A comprehensive guide to preparing and issuing a ROE is available online on the Government of Canada’s website. 

Pursuant to the Employment Standards Act, 2000, employees can be laid off for up to 13 consecutive weeks if they are not receiving any benefits or substantial income from their employer. If benefits such as pension, insurance, or income top-ups are being continued or made available by the employer, the layoff can last up to 35 weeks in a 52-week period.

Normally, after the 13th week, if there is no recall to work then the employee will be deemed to have been dismissed and will be owed pay in lieu of notice, payout of any accrued and unused paid vacation time, and in some cases, severance pay as of the first day of the layoff period. It is quite possible that this particular section of the legislation will be adjusted should the COVID-19 crisis require closures and social distancing beyond the normal 13-week layoff period.

Some have speculated that the provincial government will make legislative amendments to allow employers to keep their employees on a layoff for longer than 13 weeks without the layoff becoming a termination in the event that the COVID-19 crisis continue to impact businesses for several months. 

You are encouraged to contact any of our lawyers to discuss your issues and questions

Click here to read part two of SV Law’s COVID-19 and the Workplace: Key Considerations for Employers >