Employment Considerations by Sonia Vaknin
Sonja Vaknin from EO Toronto provides some critical points for consideration:
- If you are in an industry where you are mandated by the government to close (such as schools, gyms, rec centers, camps), then terminating your staff as a temporary layoff is appropriate, and there is little risk of employees coming back to sue the company for wrongful dismissal. The caveat is that the employer falls within the government-mandated closures.
- If a business does not fall into this category, i.e., restaurants, hair salon, construction companies, etc. – but due to the loss of business, they need to lay people off, employers do risk being sued for wrongful dismissal. The courts regard “temporary layoff” or any form of layoff as “termination.” And with termination comes the risk of wrongful dismissal lawsuit if the employee is not “packaged out” appropriately. We urge you to review your employment contracts and ensure that you have appropriate termination provisions set out. These are unprecedented times, so it is difficult to say with certainty how these measures will be viewed in the future.
- To mitigate the chance for lawsuits, it is advisable to obtain a written “consent” from the employees that they agree to the temporary layoff – so that they can collect EI during this difficult period. The consent may be strong evidence in court in the future.
- It may also be considered “reasonable” to reduce salaries by 10-15% across the board temporarily. It may not be considered “constructive dismissal” if it is temporary given COVID-19 and provided it is across the board for all the staff. Again, these are unprecedented times, so it is difficult to say with certainty how these measures will be viewed in the future.
- It may also be reasonable to cut the workweek to 4 days and adjust employee pay accordingly due to a shortage of work.
- Employees do not have the right to refuse to work or come into the office provided that the work environment is “safe” – within the guidelines issued by the government (i.e., 2 meters apart; extra cleaning and sanitizing of workspace; etc.). Just because someone is afraid to come to work, doesn’t give them a legal right to stay home without consequence. If your business is such that staff can work from home effectively, then it is good practice to let people do that. However, in a business where this is not possible, employees cannot simply elect to stay home unless they are sick or someone in their household is sick, or they need to take care of a family member. The key is for employers to provide a safe working environment, following the guidelines issued by the government.
Below are a couple of links you may find useful:
- A chart on how to apply for Government benefits if you are financially affected by coronavirus
- Government of Canada website for further assistance
Here is a recap on the 75% announcement for wage subsidies:
- Qualifying for the 75% wage subsidy will be a revenue-based test. It will apply to businesses who can show that revenue has dropped 30% or more as a result of COVID-19.
- Number of employees is not relevant. All companies will qualify (large and small), including not-for-profits and charities.
- 75% is calculated based on a maximum annual salary per employee of $58,700; ($847 per week, per employee).
- Serious consequences will ensue for businesses who use this to “game the system”.
- Employers are encouraged to re-hire people who have been laid off due to COVID-19 and to top up the remaining 25% of payroll