With COVID19 forcing many businesses to close and others to see a serious drop in revenue, many companies are having to face the difficult consideration of laying off staff to decrease their payroll expenses. While most of the standard laws about termination of employees apply, there are some new or coronavirus-specific laws in place to consider.
Termination of Employees
An employer may wish to let an employee go “for cause” – “for cause” termination being a specific and stringent category of termination that we discussed in a previous blog post and includes termination for things like repeated dishonesty and insubordination after multiple warnings or serious infractions such as theft.
In the case of COVID19, however, most terminations employers will be considering will be without cause due to a work shortage, closure, or desire to cut back on expenses. In such cases, employers are required to give notice to the employee or payment in lieu of notice, typically called severance. The amount of notice or severance an employee is entitled to depends on three things: the legislation, the terms of a contract of employment, and common law requirements.
- The B.C. Employment Standards Act (the “ESA”) provides that employers must give a certain amount of notice depending on how long the employee has been working for the employer. This goes up to a maximum of 8 weeks’ wages. (see ESA, s.63).
- A written employment contract may provide that the employee is entitled to only the notice that the ESA requires or more (but not less).
- The common law (case law) provides that employees – barring a valid employee contract to the contrary – are entitled to more notice that that in the ESA based on a calculation of factors including the employee’s age, position, and length of service. Each situation must be assessed on its own factors (and it is best to have a lawyer advise on this), but in some cases this can be a substantial amount of notice or severance owing to the departing employee.
(A brief disclaimer: while the above is generally true, there are exceptions and different rules in some circumstances, including terminations due to layoffs of 50 or more employees in a short time, unionized employees, and employees with fixed term contracts. Ideally, an employer should seek legal advice before terminating any employee. This is an area that we deal with frequently. You can contact us for assistance.)
A possible exception in the ESA
The ESA does have a section in it that provides for an exception to the notice/severance requirements under the ESA; that section reads:
“Sections 63 and 64 do not apply to an employee …employed under an employment contract that is impossible to perform due to an unforeseeable event or circumstance other than receivership, action under section 427 of the Bank Act (Canada) or a proceeding under an insolvency Act” (ESA s.65(1)(d))
Normally, this section applies to things like a fire or flood at the place of business, but the Employment Standards Branch has added new policy language saying that it “may” apply to terminations due to COVID19. As the Employment Standards Branch used the word “may” it is not certain that it applies and because of the newness of the COVID19 pandemic, there is no prior law on a situation precisely like this. That being said, this exception may be able to be used by employers terminating employees for the sole reason of a government-ordered work closure (and not merely a downturn in business) due to COVID19, however the employer would have to exhaust all possible alternatives, such as having the employee work remotely or similar work arrangements. This exception should be relied on with caution and with specific legal advice, which we can provide.
Prior to March 2020 there was no ability for an employer to temporarily lay off an employee without triggering a termination unless:
- the contract with the employee expressly provided for that option;
- there is a well-known industry practice of layoffs; or
- the employee agrees to a temporary layoff.
In March 2020, an amendment was passed to the ESA (section 52.12) to allow for a temporary, unpaid leave for employees due to COVID19. It is important to note though that this section allows for a temporary leave, in the circumstances listed below where the employee requests it. While this section may be beneficial for employers as well, it requires the employee request the leave.
The section provides that if an employee requests a temporary leave due to COVID19 they are entitled to such (unpaid) leave if any of the following applies:
- they have been diagnosed with COVID19 and are acting according to medical or health advice of a category of professional listed in section 52.12(2)(a) of the ESA;
- the employee is in quarantine or self-isolation per the Quarantine Act (Canada) or the order or guidelines of the health organizations listed in section 52.12(2)(b) of the ESA;
- the employer has directed the employee not to work due to concern about the employee’s exposure to others;
- the employee is providing care to their child or to an adult under their care due to a disability or similar reason;
- the employee cannot return to B.C. due to COVID19 travel or border restrictions; or
- a prescribed situation exists relating to the employee.
(see the ESA s.52.12 for the complete section and language)
The unpaid leave stays in place for as long as the above criteria is satisfied (s.52.12(3)).
An employer cannot demand a doctor’s note (s.52.12(5)), but the employer can request proof that any of the above criteria are satisfied and the employee must provide same as soon as they are able (s.52.12(4)).
The above section is retroactive to 27 January 2020.
If you are unsure how to navigate this new section of the ESA or how it relates to your specific circumstances, you can contact our lawyers who would be happy to help.
As the COVID19 situation is changing on a daily basis, employers considering their options for terminations or layoffs of employees should seek legal advice and consult the most up to date information from government sources. Our lawyers are staying abreast of these changing laws and stand by ready to advise you on your unique circumstances. You can contact us to set up a consultation.
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