This advisory note has been developed to assist our Alberta clients with some of the continuing employment legal issues they may face in light of the COVID-19 virus. This is not intended as a substitute for legal advice, but a supplement to it. Each employer will need to make its own decisions, having regard to such things as: (i) the constantly changing advisories from government and public health agencies in Canada; (ii) the nature of the employer’s business; and (iii) the employer’s financial health. If you have any questions, please reach out to one of the members of the Dentons Canada Employment and Labour Law group in Alberta.
Potential options for Alberta employers, in no particular order:
Short Leave of Absence (sick leave / quarantine leave):
Employees who are ill may be entitled to up to 15 weeks of Employment Insurance (EI) sickness benefits. A medical certificate is usually required. However, on March 13, 2020, the Government of Canada announced that employees who take such a leave or are under quarantine will be entitled to Employment Insurance (EI) sickness benefits for a 14-day period, effective immediately and without the usual seven-day waiting period, and without the need for a medical note. If the employee becomes ill while under quarantine or continues to be ill (in either case requiring a longer leave period), the EI benefit will only be continued once a medical certificate has been provided.
Employers may consider undertaking temporary layoffs, work-sharing, pay cuts, reduced working hours and/or staggered work hours.
All of these options would likely constitute a fundamental change to the terms of employment of employees, and could therefore constitute constructive dismissal. The question that employers, therefore, need to consider, is whether it’s better to risk constructive dismissal and save jobs, or to undergo terminations if finances do not permit continued employment by all employees. Each employer needs to make its own decision with respect to risk tolerance regarding potential constructive dismissal claims; however, it may be reasonable to assume that due to court closures, and the fact that employees may be thankful to not have job cuts, constructive dismissal claims will not be as big an issue as might have been the case under other circumstances. Pay cuts, reduced working hours and/or staggered work hours are an operational consideration for each employer, with no legal repercussions other than the possibility of constructive dismissal claims. Temporary layoffs and work-sharing need to be undertaken properly, if at all, and are addressed in more detail below.
In Alberta, employers can temporarily lay off employees for up to 60 days in any period of 120 days (with no obligations to continue benefits), or a longer period (if the employer and employee agree, and the employer continues benefit payments during the layoff period). The Employment Standards Code also requires notice of layoff of at least one week for employees employed for less than two years, and two weeks for employees employed for more than two years. These notice requirements do not apply if unforeseen circumstances prevent an employer from providing the notice.
If you have a unionized workforce, the layoff provisions of the collective agreement will govern.
The benefit of temporary layoffs is that even though there is a risk of constructive dismissal claims, they preserve jobs and permit employees to collect EI coverage for the duration of the layoff.
It should be noted that even if a temporary layoff constitutes a constructive dismissal, if the employer is able to show that the employee would have returned to work in a few short weeks when the public health emergency ended, had the employee not left and claimed constructive dismissal, then the employer will have an argument that the employee should have stayed with the employer in order to mitigate. In such a case, the employee may only be entitled to notice during the period of the public health emergency temporary layoff.
Finally, temporary layoffs must be undertaken in writing and must conform to a number of technical requirements set out in the Employment Standards Code. It is generally safest for the employer (and best for the employee) if the employee is given benefits continuance and the employer has flexibility over when the layoff will end. Dentons Canada’s Employment and Labour lawyers can assist with providing temporary layoff letters and additional advice.
Employment Insurance top-ups:
Employers that have registered a supplementary unemployment benefit (SUB) plan with Service Canada, may top up EI coverage for employees whose employment is disrupted by a temporary stoppage of work, training, illness, injury or quarantine. If a SUB plan has not been registered with Service Canada, EI top-ups are currently only permitted for employees on Pregnancy Leave, Parental Leave, Family Medical Leave, and Critical Illness Leave. Unfortunately, for employers that provide a top-up to EI coverage for a non-approved leave, or where there is no SUB plan in place, the government will claw back payments from the employee.
It is hoped that as part of its response to the COVID-19 outbreak, the federal government may amend its legislation to provide for EI top-ups for other leaves, although no such amendment has yet been made public.
For employers that wish to apply for the registration of a SUB plan now, the registration date of a SUB plan is the date it is submitted to Service Canada, as long as the application is complete. It ordinarily takes some time for the government to process applications.
As per the federal government, “Work-Sharing (WS) is an adjustment program designed to help employers and employees avoid layoffs when there is a temporary reduction in the normal level of business activity that is beyond the control of the employer. The measure provides income support to employees eligible for Employment Insurance benefits who work a temporarily reduced work week while their employer recovers. WS is a three-party agreement involving employers, employees and Service Canada. Employees on a WS agreement must agree to a reduced schedule of work and to share the available work over a specified period of time.”
Due to the COVID-19 situation, the federal government has announced that the maximum duration of approved WS agreements can be extended from 38 weeks to 76 weeks.
For companies that do not have an approved WS agreement in place, applications must be submitted to Service Canada a minimum of 30 days prior to the proposed start date. Application information can be found here. It is currently unknown how long it may take for the processing of applications. It is hoped that as part of its response to the COVID-19 outbreak, the federal government may amend its legislation to provide for easier access to WS, although no such amendment has yet been made public.
Short-term disability plans:
For employers that have short-term disability (STD) plans, the Canadian Association of Life and Health Insurance Companies (CLHIA) has indicated that employees who have been put in quarantine by a doctor or government authority, may be able to receive short-term disability benefits under those plans. For plans that are insurer-funded rather than employer-funded, this may be of assistance for ill employees at no additional cost to employers. Employers are advised to review their STD plans and call their insurance providers for additional information.
Termination of employment:
It is recognized that for some employers, the only option may be termination of employment. While that will presumably be a last option for employers, the benefit is that eligible employees will be entitled to apply for EI coverage. Employees can receive EI from 14 weeks up to a maximum of 45 weeks, depending on the unemployment rate in their region at the time of filing the claim, and the amount of insurable hours that the employee has accumulated in the last 52 weeks or since their last claim, whichever is shorter. The basic rate for calculating EI benefits is 55 percent of average insurable weekly earnings, up to a maximum amount of $573 per week.
Employers considering termination of employment for their employees should try to keep in mind, to the extent possible, whether employees have worked sufficient insurance hours prior to the termination, so as to be able to qualify for EI coverage.
Working on Claim:
Service Canada has an EI Working on Claim program, provided the person on benefits does not work a full week. Working on Claim requires the employee to declare their earnings online. However, it permits the employee to keep 50 cents of every dollar earned, up to 90 percent of their usual weekly pay. If they go over 90 percent, then EI benefits are deducted dollar for dollar.
The following is a Working on Claim calculation example from the federal government:
John was laid off when the grocery store where he worked shut down. His weekly earnings at the grocery store were CAN$500, so his weekly EI benefit rate is CAN$275 (55 percent of CAN$500). He has found a part-time job at a restaurant, where he works three days a week and earns CAN$300 per week. As a result, his CAN$275 in EI benefits are reduced by CAN$150 or 50 cents for every dollar he earns at the restaurant (300 ÷ 2 = CAN$150). This brings his total EI benefit to CAN$125 (CAN$275 – CAN$150 = CAN$125). In the end, John takes home CAN$125 per week in EI benefits plus his part-time wages of CAN$300, for a total of CAN$425.