So, how can employers best be prepared to face any legal challenges that result from modifying employment duties or laying off staff during COVID-19?
Have a written employment contract that meets or exceeds the Employment Standards Act
If you are an employer in B.C, you may likely be familiar with the Employment Standards Act.
The British Columbia Employment Standards Act is considered the minimum standard for terms of employment. It is important to note an employment contract cannot contain terms of employment below the standards specified in the Act. For example, the Act outlines minimum severance requirements, among many other standards.
The employee-employer relationship is a contract and governed by the British Columbia Employment Standards Act. Even if no written employment contract was created, the courts will imply a contract exists.
Having a written employment contract allows you to specify what severance an employee will receive (provided it meets the minimums in the Employment Standards Act) as well as help avoid misunderstandings and potential disputes between employers and employees.
An employment contract can help avoid paying out severance based on common law which, depending on the circumstances, could be substantial - should the employee choose to litigate. It would also help avoid legal fees during such a litigation.
More details on severance can be found below.
Modification of employment duties, constructive dismissal & termination- what to consider
If an employer makes a "unilateral and fundamental change" to the terms of an employment contract, this is considered constructive dismissal. Constructive dismissal could occur when hours or pay are reduced, or job duties are modified in a significant way.
Constructive dismissal means the employee has effectively been dismissed and thus it can trigger severance - either by the terms of your employment contract, the British Columbia Employment Standards Act, or common law.
If your business will be modifying the terms of employment, you should take care to ensure this does not trigger constructive dismissal. A good way to avoid this is to be proactive, communicate openly with employees, and have them agree to any changes in writing.
According to Dean, laying off an employee without cause simply due to COVID-19 will trigger severance.
The British Columbia COVID-19 legislation
In the new COVID-19 legislation, there is still no mechanism that allows employers to layoff employees without triggering severance.
Employees are, however, entitled to unpaid leave if they meet one of these criteria:
- They have been diagnosed with COVID-19
- They are quarantined due to COVID-19
- They have been directed not to work to protect others
- They need to care for children or dependents
- They are outside B.C. and cannot work
As an employer, a business must:
- Keep their job available
- Rehire them once COVID-19 has ended
When exactly COVID-19 will be deemed to have ended is ambiguous; it is yet to be determined. Dean believes it will likely come from some kind of indication from the government.
Dean recommends monitoring the COVID-19 situation closely. Take screenshots, keep records of any news or updates affecting your industry or business. In doing so, if you are ever challenged as to why you didn't rehire an employee at a certain time, you will be able to provide your reasoning for why you didn't rehire them at the time.
It is also important to note COVID-19 and the legislation are constantly evolving and subject to change.
How much severance could you pay?
The Employment Standards Act states employees are entitled to 1 week's worth of compensation per year of service when terminated - either intentionally or through constructive dismissal.
However, common law states employees should receive 1-4 weeks' worth of compensation per year of service depending on:
- Years of service
- Their age
- Their position
- The industry
- How difficult finding new employment would likely be
It is very important after severance is agreed upon to have an ex-employee sign a release. A release confirms the ex-employee has agreed to the severance and will not pursue additional severance some time in the future.
The duty to mitigate
It should be noted as well that an ex-employee has a duty to mitigate. This means that despite having been terminated, the ex-employee still must make reasonable efforts to seek a new job, or otherwise mitigate the harm resulting from losing their job. In the context of COVID-19, this could mean taking government benefits.
The courts will consider this during litigation. For example, if an ex-employee is found to be owed severance of $5,000 but could have collected Canada Emergency Response Benefit (CERB) or otherwise worked for $2,000, it is possible they will only be awarded the difference of $3,000.
The bottom line
Best practices for employers during COVID-19 come from having open, honest communications. Equally important are written employment contracts, and written agreements for any changes whether temporary or permanent.
As Dean says, "be proactive. Always have an employment contract."
Dean Davison practices law primarily in the area of civil litigation, with a focus on business disputes for medium sized local and national organizations, including but not limited to conflict arising out of contract, employment and human resources matters and leases, and estates, for which he regularly appears in all levels of court in British Columbia
Fernandez Young LLP can help your business navigate the financial challenges of COVID-19 and make sure you get the right government benefits.
This post is not intended to serve as legal advice, and only provides general information. Always seek professional advice if unsure about a decision related to employment law.