Current and accurate as of March 26, 2020
COVID-19 Employer Information
As the public health crisis in relation to COVID-19 continues to unfold, Alberta companies are facing even more difficult decisions regarding social distancing, remote work arrangements, layoffs and even terminations. In our second information update, we will provide further information regarding some of the more pressing issues that our clients have encountered over the past few days. This information is intended for non-unionized workers, so if you require information related to your unionized employees, please feel free to reach out and we will direct you to alternate sources of information.
Please note that this is a rapidly changing and evolving situation, and that this information is based on our best knowledge at the current time. Due to the unique circumstances of every business, not all information is applicable to all employers, so please feel free to contact us with any questions.
Q1: There has been a lot of confusion about Premier Kenney’s announcement that Alberta employees are now entitled to 14 days of paid sick leave. Has this situation been clarified?
Yes – on March 17, the Employment Standards Regulation was amended to state that an employee is entitled to unpaid leave for 14 consecutive days if the employee is under quarantine.
Q2: What is the difference between sick leave and layoffs for the purposes of allowing our employees to access EI benefits?
If an employee who does not have access to paid sick leave (or similar workplace accommodation) is sick, quarantined or forced to stay home to care for someone ill, they can access up to 15 weeks of EI sickness benefits, and the usual one week waiting period has been waived. No medical note is required to access these benefits. In addition, those employees who are quarantined or sick as a result of COVID-19, but who do not qualify for EI sickness benefits, may be eligible for receipt of the newly created Emergency Care Benefit, which provides a payment of up to $900 bi-weekly for 15 weeks. The details of this program have not yet been released.
In contrast, a layoff under the Employment Standards Code is a temporary suspension of employment for up to 60 days, during which time the employee may apply for regular EI benefits under the usual processes. At this time, this presumably includes the one-week waiting period before the benefits will commence. If the employee has not been brought back to work within 60 days, on the 61st day their employment is deemed to be terminated and the employer must provide pay in lieu of termination notice to the employee. The 60-day layoff period can be extended in certain circumstances, and it is possible that the layoff itself could trigger an allegation of constructive dismissal (both of which will be discussed below).
Q3: What do I have to include in my layoff notices?
Pursuant to the Employment Standards Code, a written notice of a layoff must be provided to each affected employee. This written notice must include the following:
- That the layoff is temporary and the date that the layoff takes effect (the “Effective Date”);
- That the Employee will be paid all amounts owing up to and including the Effective Date;
- That the Employee will be given seven days’ written notice of their return to work; and
- The notice must include the provisions of the Alberta Employment Standards Code, sections 62-64.
Q4: If the COVID-19 situation does not resolve, can I extend my employees’ layoffs beyond 60 days?
Maybe – the Employment Standards Code allows a layoff to be extended if, during the period of the layoff and with the consent of the employee, the employer pays the employee wages or an amount instead of wages, or makes payments for the benefit of the laid-off employee in accordance with a pension or employee insurance plan or similar plan. Once those payments cease, however, the employee is deemed to have been terminated and they are entitled to receive termination pay under the Employment Standards Code.
Given the economic uncertainty created by the COVID-19 crisis, the Alberta government may be forced to implement new rules to extend or waive the 60-day period for layoffs. Although there is no guarantee that this will happen, it could be a necessary step to curtail the financial crisis that many businesses are now facing, and we may hear more about this in the coming weeks.
Q5: If our business does not cut its operating costs during this time, we will most likely be forced to close our doors. Can we ask our employees to voluntarily reduce their work hours from full time to part time?
Generally speaking, imposing any such changes on an employee without their consent would most likely trigger an allegation of constructive dismissal, entitling the employee to sue for wrongful dismissal and entitlement to termination pay as required under the Employment Standards Code including common law notice (for further information, see our Employer Information Update #1). However, an employer and employee can mutually agree to changes in the employee’s conditions of employment, as long as those changes do not breach the minimum statutory requirements under the Employment Standards Code. If agreed upon, all such changes and the employee’s consent should be clearly documented in writing.
In these uncertain economic times, a collaborative approach to a reduction in hours may be the best way to manage the situation and the risks. By explaining the reasons behind the reduction in hours (ie. a desire to keep the business afloat without terminating employment where possible) employers may get more buy-in from employees and a willingness to agree to the reduction in hours. The situation may be more acceptable to employees given the implementation of the EI Work Sharing Program, which provides EI benefits to workers who agree to reduce their normal working hours as a result of developments beyond the control of their employers, by extending the eligibility of such agreements to 76 weeks, easing eligibility requirements, and streamlining the application process.
Q6: What are the risks of laying off employees?
Even though temporary layoffs are permitted by the Employment Standards Code, the common law does not recognize an absolute right to lay off employees. In the absence of a policy which informs an employee that an employer can temporarily suspend their employment, the common law looks upon a layoff as a constructive dismissal, which triggers an employee’s right to termination pay as required under the Employment Standards Code including common law notice (for further information, see our Employer Information Update #1). Therefore, in order to take advantage of the layoff provisions of the Code, an employer must have a contractual provision or layoff policy in place.
Having said that, the situation that employers are currently facing is unique, and it remains to be seen whether future courts will see things differently as a result of the COVID-19 crisis. It is possible that the courts will find that a reasonable person, in these unique circumstances of COVID-19, would not view a layoff as an indication that the employer no longer intended to be bound by the employment contract. However, as it stands now – this is the state of the law – as such, employers should maintain careful records to back up the exigent circumstances that led to the layoffs during this time. They should also explore whether alternative options may be available, such as a voluntary reduction in hours (see discussion above) and potential top ups of the employee’s wages through new EI benefit programs.
Q7: Can we simply terminate employees at this time?
While you can terminate employees at this time, this may be a very expensive undertaking for your business. Generally, an employer can terminate an employee at any time for any reason, as long as reasonable notice of termination is provided and there is no breach of the Alberta Human Rights Act in relation to the termination. In the current circumstances, this means that you must exercise particular caution with respect to any employees who are on sick leave, or who are required to care for children or sick family members.
However, unless the employee has a valid employment agreement which contains an enforceable clause limiting their entitlement to reasonable notice, reasonable notice entitlements are calculated according to the common law. The reasonable notice entitlements are influenced by many factors, and can be as high as one month’s notice per year of service, or more. In addition, an employee is entitled to receive all amounts that they would have received if their employer had given them working notice instead of pay in lieu. This includes the value of all benefits, commissions, bonuses, etc. that they would ordinarily have received. The fact that COVID-19 has negatively impacted your business, and that you may not be able to provide each employee with pay in lieu of reasonable notice, does not make any difference (at this time at least) to an employer’s obligation to provide notice of termination. For further information, see our Employer Information Update #1.
Q8: How can we manage our employees who are working from home as a result of COVID-19, to ensure that they are continuing to work?
The best way to ensure that your employees are aware of your expectations while they work from home during this crisis is to establish and communicate clear guidelines and policies regarding remote work. These policies should address such things as confidentiality of information, hours of work, availability, ownership of electronic equipment, reporting requirements, etc. We can assist you in creating and implementing remote work policies in your workplace, so please feel free to reach out to us with any questions.
As the situation with COVID-19 continues to unfold in Alberta and around the world, businesses are coming to grips with the reality that this situation will likely continue for longer than originally anticipated, and with much more broadly reaching effects. We are continuing to do our best to stay abreast of the latest developments so that we can assist our clients to navigate these increasingly difficult times.
This information is intended for non-unionized workers, so if you require information related to your unionized employees, please feel free to reach out and we will direct you to alternate sources of information.
Q9: We have been forced to layoff a number of our employees on short notice due to the COVID-19 outbreak. When are we required to pay them their accrued wages and vacation pay?
The Employment Standards Code does not give any guidance on the payment of earnings when implementing layoffs. To be on the safe side, we advise compliance with the rules for payment of earnings on termination – namely, that they should be paid no later than three consecutive calendar days after the last day of employment. If you have some lead time for the layoffs and can handle it administratively, it may be beneficial to give employees their notice of layoff and final accrued pay at the same time, especially if the federal government has not yet waived the one-week waiting period for regular EI benefits.
Q10: If we are forced to cease operations, or cannot bring our employees on layoff back to work after 60 days, what do we need to consider aside from the payment of termination notice?
If you will be terminating 50 or more employees within a four-week period, the Employment Standards Code has special rules relating to group terminations with which you need to comply. The employer must give the Minister of Labour and the affected employees the following amount of written notice according to the number of employees affected:
- 8 weeks - 50 or more employees but less than 100
- 12 weeks - 100 or more employees but less than 300
- 16 weeks - 300 or more employees
This notice can be provided as working notice or pay in lieu of notice, or a combination of both. In the circumstances of a mass termination, the notice periods are based solely on the number of employees being terminated, regardless of the years of service that an individual employee may have.
Failure to give the required notice to the Minister of Labour can result in an administrative penalty being imposed on the employer. Once the Minister has been informed, staff will offer the employer information about programs and services available to the terminated employees through the governments of Alberta and Canada.
These rules may well be relaxed by the government at some point in future as a result of the current pandemic, however until that happens, employers will be expected to comply with the current rules.
Q11: We have operations in other jurisdictions where we will also need to layoff employees. Can we use the same form of layoff notice we have used in Alberta for our employees in other provinces?
We do not recommend using the same layoff notification form for employees in other provinces, as the rules in each province can differ widely. For example, in some provinces, advance notice of the layoff is not required, and in others, temporary layoffs are not permitted unless they are allowed by a collective agreement, employment contract or employee consent. In yet other jurisdictions, there is little practical difference between a layoff and a termination of employment, and the circumstances giving rise to a temporary layoff can differ widely. If you plan to implement layoffs in other jurisdictions, we recommend obtaining the opinion of a practitioner in that province. Through our Interlaw partner firms across the country, we are happy to assist you in clarifying your legal obligations when implementing layoffs in other provinces.
Q12: We wish to avoid laying off our employees for as long as possible, and many of our staff have agreed to reduce their work hours through a job-sharing arrangement. Are there any provincial or federal programs which can help to top up their earnings?
The federal government has recently made changes to the EI Work Share Program, which provides EI benefits to workers who agree to reduce their normal working hours as a result of developments beyond the control of their employers. These changes have extended the eligibility of such agreements to 76 weeks, have eased eligibility requirements, and streamlined the application process. The purpose of this program is to assist employers to avoid layoffs, and to support employees who are receiving a reduced income as much as possible. Our understanding is that the employer has to apply for this program and that there may be some lead time to do so (although likely not as much as previously) so if you think that you might want to implement the program at some future time, we recommend that you take steps to register as soon as possible. Further information about the program and its requirements should be found on the Service Canada website.
Q13: Are there any provincial or federal government programs to assist our small to medium business survive the economic fallout of the COVID-19 pandemic?
There have been numerous initiatives announced by the provincial and federal governments recently to provide financial assistance to businesses affected by these unprecedented circumstances, and we understand that additional aid programs are currently under consideration. For the time being, however, these are some of the programs of which we are aware as of the present time:
Corporate income tax changes
Corporate income tax balances and installment payments will be deferred from March 19 until August 31, 2020 to increase employers’ access to cash so they can pay employees, address debts and continue operations.
Education property tax deferral
Collection of non-residential education property tax for businesses will be deferred for 6 months.
- Municipalities are expected to set education property tax rates as they normally would but defer collection.
- Deferred amounts will be repaid in future tax years.
- Commercial landlords are encouraged to pass savings on to their tenants through reduced or deferred payments to help employers pay their employees and stay in business.
- Businesses capable of paying their taxes in full are encouraged to do to so.
WCB premium payment deferral
Small (1-49 employees), medium (50-199 employees) and large (200+ employees) private sector employers can defer WCB premium payments until 2021.
- For small and medium businesses, the government will cover 50% of the 2020 premium when it is due in 2021 – saving businesses $350 million.
- Large employers will have their 2020 WCB premium payments deferred until 2021, at which time their premiums will be due.
- Employers who have already paid WCB premiums in 2020 are eligible for a rebate or credit.
Utility payment deferral
- Residential, farm and small commercial customers can defer electricity and natural gas bill payments for the next 90 days to ensure no one will be cut off, regardless of the service provider.
- This program is available to Albertans who are experiencing financial hardship as a direct result of COVID-19. For example, those who have lost their employment or had to leave work to take care of an ill family member.
- The CRA will allow all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after March 18 and before September 2020. No interest or penalties will accumulate on these amounts during this period.
- This relief applies to tax balances due, as well as installments, under Part I of the Income Tax Act.
- We understand that this deferral will happen automatically.
Business Credit Availability Program (BCAP)
There are few details available right now, so we are hoping for additional information in the next couple days. So far, we know:
- It is generally targeted to small and medium-sized businesses.
- Over $10 billion in loans will be provided through the BCAP program.
- BCAP will provide financing and credit insurance solutions to eligible businesses. It is intended to help businesses seeking financing to support their operations and maintain jobs.
Cooperation with participating private-sector lenders:
- BCAP is administered by the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) in cooperation with participating private-sector lenders. Businesses seeking support through BCAP should contact the financial institutions with whom they have a pre-existing relationship, so that the financial institutions can assess the client's financial request. If the client's needs exceed the level of support the financial institution is able to provide, the financial institution can work alongside BDC to access additional resources (and/or EDC if applicable).
- The following financial institutions are participating in BCAP, and will work together with BDC/EDC to find credit solutions for creditworthy business clients who would otherwise have insufficient access to credit:
Bank of Nova ScotiaBMO
Laurentian BankCanadian Bankers Association
Canadian Credit Union Association
- The loans are expected to be provided at the current market rates, although this may change.
- The government is asking businesses to contact their own financial institutions directly. The financial institution will then assess the business' creditworthiness and loan request, then contact BDC "where appropriate."
Temporary Wage Subsidy
- To help prevent layoffs, the government is proposing to provide eligible small employers a temporary wage subsidy for a period of three months.
- The subsidy will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.
- Businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration. Employers benefiting from this measure will include corporations eligible for the small business deduction.
- We are not certain at this time if this measure has actually been enacted, but you should seek advice from your accountant to ensure that your business qualifies and how to apply for it.
As the above questions and answers have clarified, this may be an opportune time to consider your business’ employment contract and policy needs going forward, so that your business can weather future economic interruptions with greater certainty. Please feel free to reach out to us to discuss how we can assist you in this regard.
Recognizing that things are changing rapidly and each business and workforce is unique, please do not hesitate to reach out with questions, concerns, or if we can be of assistance in any way. Also, please note that this information is current as of March 26, 2020 and will be subject to change following this date.
This information has been provided by the Bishop & McKenzie LLP team.
Please stay safe and healthy!
Please stay safe and healthy!