Provinces and territories, including Alberta, have declared States of Emergency this week in response to the COVID-19 pandemic. Provincial governments have restricted the operation of certain businesses while public health authorities are recommending that citizens stay home and practice 'social distancing' in an effort to "flatten the curve" and prevent the spread of the disease.
Provincially, as of March 18, 2020 the Alberta government has ordered the closure of a variety of establishments including bars, nightclubs, theatres, casinos and museums. These measures are in addition to the previous order to cancel classes in all schools. While restaurants that serve minors remain open, they are restricted from having more than 50 people, or half of their capacity (whichever is less), at one time. This has led to a number of businesses closing their doors virtually overnight. While it is undisputed that these measures are necessary to protect the safety and wellbeing of Canadians, the economic and employment consequences of these measures cannot be understated.
Despite these measures being just days old, employees and employers are already starting to feel the economic effects of fewer customers and clients while commercial lease payments, financing and other expenses remain the same. Unsurprisingly, layoffs have begun as businesses attempt to keep afloat while doing their part to combat the virus. This has resulted in a surge of applications for federal employment insurance ("EI").
Traditionally, in order to qualify for employment insurance ("EI") in Canada, an employee had to meet a minimum number of hours worked in the preceding 52 weeks. In order to receive EI, an employee must have lost their job through no fault of their own (such as without cause termination, layoff or illness (such as COVID-19)). EI benefits were calculated at 55% of an employee's average insurable weekly earnings, up to a maximum of $573 per week (or $54,200 yearly insurable earnings). In addition, workers who qualified for EI had a one-week waiting period before benefit payments started. 1
On March 18, 2020, Prime Minister Justin Trudeau announced an $82 billion aid package, including changes to the EI scheme, to assist Canadians and businesses weather the economic and employment fallout from the COVID-19 pandemic.
Key aspects of the $82 billion aid package include:
- $27 billion in direct support for individual Canadians;
- Funds ear-marked for the deferral of taxes, interest payments student loans and mortgages;
- Effective March 15, 2020, the abolishment of the one-week waiting period for employment insurance ("EI") for employees who do not otherwise have paid sick leave (or similar workplace accommodation). Under the previous rules, employees would have missed one week's worth of pay while waiting for EI benefits to start. As such, the abolishment of the one-week waiting period is particularly significant given that the recommended quarantine period for COVID-19 is two weeks;
- As of March 11, 20202, the government is waiving the requirement that employees who are required to self-isolate or quarantine (either by their employers or by a public-health official) produce a medical certificate in order to qualify for EI. However, should the period of self-isolation or quarantine continue beyond two weeks, a medical certificate may still be necessary;
- An "Emergency Care Benefit" for employees who do not qualify for EI - estimated to be up to one-third of the Canadian workforce. This includes up to $900 bi-weekly for 15 weeks if an employee is required to miss work due to quarantine, illness or caring for someone with COVID-19. The benefit also applies to parents with children who require care or supervision because of school closures and are unable to earn an income, irrespective of whether they qualify for EI or not. Application for this benefit will be available in April 2020; and,
- An "Emergency Support Benefit" (details to be released) delivered through the Canada Revenue agency to provide up to $5 billion in support for workers who are not eligible for EI.
In addition, the federal government has also:
- Announced the "EI Work Sharing Program" on March 11, 2020. This program provides EI benefits to workers who agree to reduce their normal working hours and share the available work when there is a temporary decrease in business activity beyond the control of their employer; and,
- Proposed to increase the maximum annual Canada Child Benefit ("CCB") payment amounts for the 2019-2020 benefit year by $300 per child.
On March 19, 2020, Alberta's Premier Jason Kenney announced immediate funding and supportive measures to assist local businesses, employers and employees. Key features of the provincial aid measures include2:
- Deferral of corporate income tax balances and instalment payments from March 19 until August 31, 2020 in order to increase employers' access to cash so they can pay employees, address debts and continue operations;
- Deferral of residential, farm and small commercial customers' electricity and natural gas bill payments for the next 90 days;
- Changes to the Alberta Employment Standards Code ("ESC") whereby full and part-time employees can take 14 days of job-protected (but unpaid) leave if they are required to self-isolate or are caring for a child or dependant adult who have been required to self-isolate. Eligible employees will not require a medical note and do not need to have worked for an employer for more than 90 days. This leave does not apply to self-employed individuals or contractors; and,
- A payment of $573 per week (up to a maximum of two weeks) under the Emergency Isolation Support Program for Albertans in self-isolation who are not receiving EI benefits (and who meet the government of Alberta's published criteria for self-isolation). This program is meant to bridge the gap between March and April when the federal aid payments begin. Alberta is setting up an online application through alberta.ca. Funds will be deposited in the accounts of eligible recipients beginning in about a weeks' time.3
Employees working in service-type industries such as restaurants, retail and hospitality have already suffered economic hardship as a result of COVID-19 due to sweeping layoffs and reduction shifts or hours. It is expected that the number of layoffs will increase as the pandemic spreads and social isolation continues for weeks, perhaps months.
As set out above, employees who are ill or in quarantine due to COVID-19 are eligible to receive EI. In this regard, it is important that an employee apply for EI as soon as they stop working. Many employees do not realize that they are able to apply for EI even before they have received their Record of Employment (which is used to determine an employee's eligibility and benefit amount, "ROE") from their employer. Delays filing an EI claim for more than 4 weeks after the last day worked could result in the loss of benefits.
Employers and Businesses
Employers, particularly those with small businesses, are already experiencing the economic impact of the restrictive - yet necessary - regulations placed on them by both the federal and provincial governments. In this regard, a portion of the federal $82 billion aid package has been set aside to assist employers and businesses cope with the economic fallout from the pandemic. This includes a 10% percent wage subsidy for the next 90 days to a maximum of $1,375.00 per employee and $25,000.00 per employer. The government hopes that this measure will allow small businesses to avoid layoffs during the pandemic. This wage subsidy is subject to eligibility restrictions and is available to employers who are generally eligible for the small business tax deduction. It also applies to non-profit organizations and charities.
- Business tax payments owed to the CRA can now be deferred until after August 31, 2020 (but before September 30, 2020); and,
- Small businesses will have additional access to over $10 billion worth of credit in order to continue operations during this time.
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While temporary layoffs may be unavoidable at this time, employers should be mindful of the statutory requirements set out in ESC (including requirements with respect to mass layoffs for 50 employees or more) in order to avoid potential wrongful termination claims.
Employees are generally entitled to "reasonable notice" upon termination of their employment. Similarly, they are entitled to proper notice of a temporary layoff in accordance with the ESC. In short, notice of a temporary layoff must:
- Be in writing;
- State that it is a temporary layoff notice and its effective date; and
- Include sections 62 to 64 of the ESC.
The notice period set out in the ESC applies unless there is a collective bargaining agreement that states otherwise or there are "unforeseeable circumstances." In this regard, employers are required to provide:
- At least one weeks' notice of the effective layoff date if the employee has been employed by the employer for less than 2 years; or,
- At least two weeks' notice of the effective layoff date if the employee has been employed by the employer for 2 years or more.
While the government mandated closure of a business may qualify as an "unforeseeable circumstance", employers are still required to comply with the ESC layoff provisions as soon as practicable in the circumstances. As such, employers are urged to comply with the ESC layoff notice provisions as quickly and as comprehensively as possible in order to avoid claims of wrongful termination.
In Alberta, the maximum duration of a temporary layoff is 60 total days within a 120-day period. After 60 days, the employee's employment is deemed to have ended with the result that the employer is required to pay termination pay in accordance with the ESC (which may include additional common law damages).
The temporary layoff period can be extended in the following circumstances:
- The employer makes regular payment to or on behalf of the employee (such as continuing to pay wages, employee pensions or benefits); and
- The employee agrees to these payments in lieu of a firm limit of the length of the layoff.
Finally, in the event that an employer wishes to recall an employee during the layoff period, it may issue a recall notice. In this regard, a recall notice must:
- Be in writing;
- Be served on the employee; and
- State that the employee must return to work within 7 days of the date the recall notice is served on the employee.
If an employee fails to return to work within 7 days of being served with the recall notice, the employee is not entitled to termination notice or termination pay in the event that the employer chooses to terminate the employee's employment as a result of their failure to return to work.
Employers must also provide ROEs for each employee on a temporary layoff. In this regard, given that employees may qualify for EI under the new eligibility criteria implemented by the federal government in response to the pandemic, it is crucial that employers comply with the ESC requirements with respect to issuing ROEs so that their employees can access these new benefits.
Given the rapidly changing nature of the COVID-19 pandemic, it is understandable that employers will have questions with respect to their obligations to their employees. We encourage employers to consult counsel before implementing temporary layoffs or terminations in order to ensure proper compliance with all applicable legal and statutory requirements. We also encourage employers to communicate regularly with their employees and to be frank with them about temporary layoffs, including anticipated recall dates or extensions.
Scott Venturo Rudakoff's employment group is here to assist employers and employees navigate the uncertainty surrounding layoffs and terminations created by the COVID-19 situation. Do not hesitate to call or email any of our employment law practice members if you have a question about your obligations as an employer or rights as an employee.
To apply for EI visit: https://www.canada.ca/en/services/benefits/ei/ei-regular-benefit/apply.html
1. Eligibility is determined based on a set of criteria accessible within the Government of Canada's website: https://www.canada.ca/en/services/benefits/ei/ei-regular-benefit/eligibility.html
About Mackrell International - Canada - Scott Venturo LLP is a full service business law firm in Calgary, AB and a member of Mackrell International. Mackrell International - Canada is comprised of four independent law firms in Alberta, British Columbia, Ontario and Quebec. Each firm is regionally based and well-connected in our communities, an advantage shared with our clients. With close relations amongst our Canadian member firms, we are committed to working with clients who have legal needs in multiple jurisdictions within Canada.
This article is intended to be an overview and is for informational purposes only.