CoVid-19 Update for Employers
These are difficult times and many businesses are struggling with closures, reductions and an uncertain future. We remain available to support your employment and labour law needs. To assist, we will be sharing some common questions that we have been receiving from employer clients with helpful information.
The questions addressed in this email are:
- My business is currently suffering. Can I temporarily lay off staff?
- I need some staff to remain at work but on limited hours. Can I pay staff an hourly rate instead of salary? Are they still able to receive EI benefits?
- What do I do if an employee refuses to come to work because of fears of COVID-19?
Speak to Veronica (firstname.lastname@example.org / cell 250.309.4095) or Pamela (email@example.com / 250.558.3393 ext. 225) about creative solutions and financial exposure in order to understand the risks and choose the right approach. This may involve several different approaches depending on the composition of your workforce and the needs of your business.
My business is currently suffering. Can I temporarily lay off staff?
Temporary layoffs are governed by the B.C. Employment Standards Act (ESA) and allow employers to temporarily layoff employees for up to 13 weeks in a 20-week period without triggering a termination of employment and requisite statutory severance payments. Employees put on temporary layoff experience an immediate wage stoppage, so must be issued a record of employment coded for shortage of work (A) and can apply for Employment Insurance benefits.
Given that temporary layoffs are onerous for employees, the law has developed so that employers can only implement temporary layoffs if there is a contractual term in employment agreements allowing layoffs or if temporary layoffs are common in the industry, such as construction. Otherwise, a temporary layoff may be considered a constructive dismissal. This means that the employee has a basis to claim their employment has been effectively terminated and there is an entitlement to at least statutory severance. While employers are experiencing unprecedented financial challenges which require flexibility, there has been no express change to the law in this area. While there is an argument that the “unforeseen event” exception of the ESA may apply to protect employers, that is not clear. We are hopeful that the provincial government will revisit the ESA and pass legislation permitting temporary layoffs in extraordinary circumstances such as this.
Whether you can safely temporarily layoff employees will depend if you meet the above criteria. If reducing your workforce cannot be avoided, it may be necessary to assume the risk of temporary layoffs or even terminate employment with the ESA required working notice or pay in lieu, with the hope of rehiring employees later on. You may be able to motivate employees to agree to a temporary layoff as it may be beneficial to them to be eligible for Employment Insurance and have a job to return to, if they are already finding it difficult to work due to childcare or other responsibilities arising out of this COVID-19 crisis.
I need some staff to remain at work but on limited hours. Can I pay staff an hourly rate instead of salary? Are they still able to receive EI benefits?
Making significant changes to terms of employment, such as reducing hours or changing compensation, can trigger a constructive dismissal. This means that employment is be effectively terminated and severance is owed. However, if employees agree to the change, there is no constructive dismissal. Also, if the employee is ultimately offered re-employment, the employee’s claim may be limited to statutory severance.
Given the circumstances, employees may be willing to agree to changes in hours or compensation to meet business needs. Under the current Employment Insurance Program, employees can to earn some income while receiving Employment Insurance benefits. Specifically, employees can keep 50 cents of EI benefits for every dollar earned, up to 90% of previous weekly earnings. Above this cap, EI benefits are deducted dollar-for-dollar. As such, it will be important to establish an acceptable hourly rate. This program may change as a result of the Canadian Emergency Response Benefit announced March 25, 2020.
If employees do not agree to working reduced hours or changing compensation, it may be necessary to consider a temporary layoff (outlined above) or termination of employment, and possibly offering to re-hire the employee on terms designed to carry your business through the COVID-19 crisis and beyond.
What do I do if an employee refuses to come to work because of fears of COVID-19?
WorkSafeBC permits employees to refuse to work where they have reason to believe continuing to work presents an undue hazard. If an employee refuses to work, WSBC has specific requirements for addressing this, which are crucial for the employer to follow. These involve engaging a health and safety committee member, as well as a union representative (if applicable) to assess whether the refusal is reasonable, whether appropriate protections are in place to minimize the employee’s exposure and whether the employee has personal characteristics that are relevant, such as a health condition.
If the employer has put appropriate measures in place and the employee still continues to refuse to work, the next step is to contact a WSBC Prevention Officer. If the Prevention Officer can be shown all appropriate protections are in place to minimize the worker’s exposure, and the worker has no underlying health issues, then the refusal is not likely to be accepted as reasonable. If the Prevention Officer rules that the refusal is not reasonable, the worker then no longer has the protection of the discriminatory action (no retaliation) provisions of the Workers Compensation Act a result of whatever discipline the employer decides to implement as a result of the refusal.
The bottom line is that employers cannot fire or take other action against the worker until a WSBC Prevention Officer has gotten involved and ruled on the work refusal, which can take some time. There is an issue of whether employers ought to be paying this employee who is refusing to work. We caution that a refusal to pay a worker who is refusing to work could also engage a discriminatory action complaint.