Employers beware: Pandemic no excuse to 'clean house'

The numbers are astounding. More than three million people have lost their jobs through the COVID-19 pandemic. The unemployment rate reached 13 per cent in April, according to Statistics Canada.

At the height of the crisis, nearly half (49 per cent) of Canadian workers said COVID-19 had affected their employment, and half of them had lost their job temporarily (40 per cent) or permanently (11 per cent). Another 18 per cent said that their hours had been reduced, according to a Forum Research survey.

With millions of employees laid off or sent home to work remotely, the COVID-19 pandemic saw human resources managers facing an entirely new and alien landscape.

Now, as the economy re-opens, there are new legal considerations for employers. And bringing back workers who were temporarily laid off and reintegrating them into the workforce will present new challenges on a mass scale.

Recalling workers
For one, employers need to know the rules when it comes to temporary layoffs.

In Alberta, for example, the government made changes to the rules during the pandemic that provided more leeway for employers that needed to undertake temporary layoffs, says Kimberley Holland, associate lawyer at Kahane Law Office in Calgary.  

“There was a change during COVID to our employment standards code that allowed for a larger period of time for a temporary layoff. It used to be 60 days within a 120-day period; the government enacted changes to allow employers to issue temporary layoffs for 120 days.”

Once that time has lapsed, it’s important for employers to bring back workers into their former positions, she says.

“When it comes to recalling them, the employment terms would be the same. If there was an actual termination of employment and employers are looking to hire back employees, it will be absolutely critical that they do have the employees sign new agreements — but that would only happen if there was a clear end, there was a termination and they were paid out termination pay and severance pay.”

Justifying terminations
In Quebec, for those workers who are not returned to their former positions, employers must be able to defend the terminations, according to Jeremy Little, an attorney at OLS law firm in Montreal.

“It can’t just be subjectively done and justified by ‘Well, we chose to terminate this position, we have in fact eliminated the position and the exercise stops there.’ It really is also important to demonstrate that this was done in good faith, that this hasn’t been effectively replaced with another similar position, that there weren’t opportunities to put the person in another role, that the employer just chose not to do that and proceeded to just terminate the person.”

It’s important to demonstrate that the criteria used in selecting who was terminated was objective, rational and fair and not just completely arbitrary, he says.

“These are some of the very important points that employers and HR have to be aware of as regards Quebec termination,” he says. “Worst case, you could open yourself up to a claim for reinstatement with back pay and potentially further damages for abusive behaviour. It really is important to be very careful with that.”

Courts will not look too kindly on employers that try to use the COVID-19 outbreak as an excuse to trim the number of employees they have in the workforce, says Little.

“The big warning I would give to employers and HR would be there is going to be this temptation for some to use COVID as an excuse to clean house and, unfortunately, we are already seeing some cases of people trying to do that: It is not lawful; it is not a justification,” he says.

“It’s important to remember that, if someone is going to make a damage claim for severance, that damage claim is obviously inherently greater, having been terminated in the midst of the health and potential economic crisis because employability is going to be severely negatively impacted as a result of anybody who is being terminated around now.”

Rise of constructive dismissal claims?
Employers must be really careful in terms of how they recall workers back to work and what their terms of employment are going to be, says Reshma Kishnani, an associate at Mills & Mills in Toronto.  Some employers might be charged with constructive dismissal if they do not fully reinstate workers to their former positions, she says.

“If an employer has offered an employee a fair severance package, and the employee doesn’t respond appropriately, and vice versa, that kind of conduct will be taken into account. That’s the golden question right now and I know different employment lawyers have different views on how this situation is going to be considered by the court.”

Whether or not the charge is successful may depend on how things were handled, she says.

“The court is obligated to look at the circumstances; the behaviour [and] the conduct of the parties will matter. There will be consideration with respect to how an employer handles termination and how an employee responds to it, but then the courts are going to have to consider all of that in this constructive dismissal dialogue.”

For some employers, the way they handle employee redundancies will also play a role, says Holland.

“If an employee is laid off and then recalled and then laid off and then recalled, there’s potential for constructive dismissal.”

However, “when it comes to physical disabilities, illness and you have an employee that is at a higher risk due to underlying health issues such as asthma, breathing problems, auto-immune deficiencies or diseases, if there are employers that are refusing to accommodate those employees, that will be where we see an increase in constructive dismissal claims, because an employer has the duty to work with the employee and accommodate their medical condition to the point of undue hardship,” she says.

And resolving these issues through the courts should take some time, says Holland.

“These issues that we’re advocating on behalf of our clients are going to be litigated for years and years to come partly because our court system is now shut down, and there’s going to be huge delays. That’s been pretty challenging, especially for the smaller employers.”

Policy, scheduling considerations
When considering which workers should be recalled and in what order, employers should be creative in their thinking, says Kishnani.

“One of the things that the government is asking people to consider is to stagger work and report times and not to have so many people in a space at the same time. When you have those considerations, the next thing you have to ask yourself is ‘Well, if I have a staff or a workforce of 20 people and I’ve laid them all off, can I recall all 20 back? Can I do it as 10 will report to work three days a week, another 10 will report every three days?’ Or every other day you’re asked to report to work and then the other days you stay at home and work?”

For those workers who simply return to their old positions, they do not need a new employment contract, she says, but that comes with some caveats.

“Assuming an employer has properly laid off their employee or that the employee has accepted the layoff, agreed to it and the employer brings them back; the employer is bringing them back based on the current contract.”

But “if an employer wishes to amend the contract, then fresh consideration will have to be given to the employee with respect to that amendment,” says Kishnani.

CANADA SEES MAJOR DROP IN JOBS

13%
Unemployment rate for April

2.5 million
Employed people who worked less than half of usual hours

3,005,000
Jobs lost since February

-27.7%
Drop in total hours worked from February to April

Source: Statistics Canada