Welcome to the Business Decisions Podcast, my name is Stuart Wood, I am the CEO of Caravel Law and the host of this podcast. Today I’m going to be joined by Ellen Swan and Dan Black, two employment lawyers who practice here at Caravel Law. We are going to be talking to Ellen and Dan, focusing on key challenges and business decisions people are having to make around their people right now. So we wanted to put something out to be helpful to the broader audience out there, but both companies and individuals who are being affected by the CC situation. I should point out, nothing you are going to hear on the podcast should be considered legal advice -Ellen and Dan are just providing general information for the audience. If you have specific questions you should speak with a lawyer directly. So here is my conversation with Ellen and Dan.
Stuart: Alright, I am joined by Ellen Swan and Dan Black – it wasn’t intentional but we have ‘Black Swan’ on today to deal with a Black-Swan-type situation. So Ellen, what are some of the challenges people are facing right now? I know you have been fielding a lot of calls in the last couple of weeks.
Ellen: Yes it’s a really challenging time for employers who are considering what their next move should be, how long any changes to working conditions or temporary layoffs or if they have to permanently let people go, given cash flow issues — how to accommodate people who can’t be in the workplace because of the virus or exposure to the virus – they are facing a lot of interesting challenges right now.
Stuart: And Dan, what are some of the challenges and the calls you are receiving from companies and people right now?
Dan: The main challenge most are facing is whether they have enough work to continue employing employees, and if they do have enough work, whether they are able to let those employees work from home or whether they are struggling with the requirement that employees be in the workplace, which gives rise to employees of course being concerned being exposed to others.
Stuart: Ellen – companies that have employees that need to physically be in the work space to be able to do their jobs – so that could be in the stores that are still open or office services-type people in office arrangements – what are companies in those situations having to consider in how they deal with those employees?
Ellen: I think there’s a couple of different areas of that working relationship that are raising questions for employers. So first, how are employees getting to work? Can you assist them in in that commute to maintain social distancing by paying for Ubers or covering the cost of parking or commuting individually that way, so as to allow that employee to avoid participating in public transit? What are you doing about insuring the cleanliness of the workplace for those who have to be there? So enhanced cleaning protocol, issuing protective gear to employees who have to deal with the public, so masks, gloves, plexiglass barriers like Loblaws is doing for its cashiers, and also, are you limiting the number of people the employee has to be exposed to in the workplace by ensuring that anyone who can work from home is working form home, to allow a little bit of social distancing, in keeping 6 feet apart in the office space? And finally, are you incentivizing these employees to come in and risk exposure for themselves and their loved ones? Loblaws introduced a wage increase to ensure their front of line cashiers and people dealing with the public with essential services in the grocery and drug stores are coming into work and want to be there.
Stuart: What are some of the key factors that influence the options available for a company that is wrestling with those kinds of decisions?
Dan: The work from home one is the biggest of course, if you have the flexibility to equip people to work from home then that goes a long way to solving many problems. But if you don’t have the work from home option, things get a lot more difficult.
Stuart: So companies that have employees who can do their job from home and they can accommodate that but they are looking to reduce costs because they have seen their revenue drop, in some cases 80% – 100%, what sort of options do those sorts of companies have and how are they thinking through the challenges they are facing right now?
Dan: So one possibility – if there is work but not enough work to go around – is to try and spread the work amongst the employees as equitably as possible. That involves reducing hours at work and likely reducing pay for each employee which could potentially trigger claims of constructive dismissal. But many employers consider that ‘Let’s share the pain, we are all in this together’ approach to be preferable to laying off some employees or even terminating employment while other employees remain fully busy.
Stuart: Ellen, companies that have an employee that has either tested positive or is a presumptive case because they are sick, what are the considerations companies need to keep in mind when dealing with employees that are dealing with the illness first hand?
Ellen: The Ontario government recently introduced what I think are unnecessary changes to the Employment Standards Act to ensure job protection for people who are either self quarantining because of actual exposure or to care for those who are sick, those protections already existed, I believe, in the Employment Standards Act in the Ontario Human Right Code. But in any event taking time off to deal with the virus, either as protection for those given exposure, but not actual symptoms or positive tests, or because of a positive test or illness, that’s a job protected leave of absence, and you cannot terminate someone’s employment or adversely treat them in the workforce because of that leave of absence and that’s something employers need to keep in mind. The other thing you need to keep in mind is how are you going to handle potential exposure in the workplace. Do you have to close down that location of your operation? Do you have to tell other people such as clients, third parties or service providers that they’ve been exposed and so keeping track of and how to document who people have been dealing with so you have that complete list of who needs to be informed. And finally, how much are you going to disclose? So keeping in mind privacy obligations to protect the personal information of your employees who have been exposed or tested positive so that you’re not giving more info that you need to to the people you have to disclose to.
Stuart: And if companies are facing a layoff decision with their workforce, do the people who are at home sick with the illness get treated differently/separately than the remaining workforce?
Ellen: Potentially. They are not earning anything when they are at home, they may be getting STD Benefits or Employment Insurance Disability Benefits depending what benefits the employer offers, and they do often get treated differently in non Covid-19 layoffs circumstances, so I would expect they would be treated differently. You wouldn’t necessarily say to an employee on leave ‘You are being laid off.’ You may say when they claim to be ready to return to work that there’s no job for them to return to at that time – but you sort of punt that conversation down the road a little bit.
Stuart: And how do companies think through the terminating employees vs. laying them off decision – what’s the difference there?
Dan: Well a lot of it has to do with employers anticipating whether they will be able to ramp business back up again after the pandemic slows or has passed. I have some retail clients who have physical stores and an online presence and I know some of them are beginning to think about the idea of closing their physical stores and just staying online.
Stuart: Ellen, do companies have any options of asking or possibly forcing employees to use their vacation time if they can’t come to work for whatever reason?
Ellen: I think that will depend on the reason why they can’t come to work and what jurisdiction the employer is regulated by. For example in the Canada Labour Code – so if an employer is a federally regulated undertaking – it cannot force employees to use paid time off instead of taking statutory leave of absence. So employees can interrupt vacation or not take vacation and take an unpaid leave under the statute, if that’s the reason they are going to be out of the workforce, so for example, self-quarantining or taking care of a family member, those would both be statutory leaves under the Canada Labour Code, and an employee could not be required to take their vacation time instead of taking unpaid time. Otherwise if it’s unrelated to the virus in that personal sense and only because of a shortage of work, you can under most employment standards legislation, employers can schedule employees paid time off. I would ask though if that’s what you really want to do as an employer, it seems to me to allow an employee to hold on to vacation or paid time off for after this crisis can be a really cheap gesture of good will that an employer may want to make good use of. Any circumstance where you can get the employee to buy in to the measures you are taking to ensure or take care to hope or ensure that the business is still there once this crisis is over will, I think, go a long way to making sure you minimize your litigation risk when all this is over.
Stuart: So Dan, an employer wants to approach their workforce with an idea of an arrangement that will share the burden across all employees versus having smaller numbers of people laid off, what are the best practices for companies to approach that conversation and to build alignment for an idea like that?
Dan: To me in this case it’s absolutely essential – when I think back to the financial downturn in 2008, the clients I had at that time who communicated clearly and effectively with their employees made it through better than others. That includes letting employees know on a regular basis where things are at with the business, where work volumes are at. Letting the employees know that the business is looking at many different options, not just laying off employees, letting them know you are looking at options that affect more than just small groups of employees. So for example, the more senior employees aren’t intending to work at full pay while the front line employees are laid off or having hours reduced. In terms of a work share arrangement, there are both formal work share arrangements and more formal ones thought the Ontario Employment Insurance Program. Some of my clients are reducing hours and pay across the board by a set number. Others are going one step further and submitting applications to Service Canada for formal Workshare programs under which the available work are spread amongst employees – they are no longer working full hours, no longer receiving full pay, but the EI system steps in to fill some of that gap. That’s a bit of a lengthy process – the government is trying to reduce the review time down to a week for that – sometimes it takes 30 days – but sometimes the combination of an informal work share arrangement while the formal one is under application could be used.
Stuart: Ellen, from a purely practical point of view, how are companies handling layoffs and termination conversations when they can’t meet in person with employees?
Ellen: Yes that’s really changing the dynamics of those conversations unfortunately. Technically, notice of layoff and notice of termination has to be given in writing in any event but it’s something most employers like to do in person to provide the comfort and support they want to do through a difficult conversation. Unfortunately we are in a brave new world of having to do that virtually, whether over the phone or video conference or over email depending on the nature of the relationship and the diverse diaspora of the workforce depending where they are.
Stuart: Dan you mentioned some companies need to worry about the steps they make constituting constructive dismissal. Can you explain what constructive dismissal is?
Dan: Right constructive dismissal is a concept of law that if an employer doesn’t outright say to an employee “I am terminating your employment” but the employer makes such a significant unilateral change to the employee’s terms and conditions of employment, the law treats it as if it amounted to a termination of employment and the employee is allowed to claim their termination entitlements. So for example although the Employment Standards Act allows for temporary layoffs, most judges have interpreted the common law not to permit temporary layoffs unless there’s an express right built into the employee’s terms and conditions, ideally an employment agreement. So if you don’t have that right built into your employment agreement and you lay an employee off for a temporary period the employee is entitled to treat that as constructive dismissal and demand their termination entitlements. Similarly, most employers don’t have the right to unilaterally reduce the hours of work and pay rates. The loose rule of thumb is about 10% – if there’s a reduction of less than 10% of pay is not constructive dismissal but more than 10% is constructive dismissal. In this particular context I’m finding a lot of my client’s employees don’t really want to allege constructive dismissal, demand their termination entitlements and now be out of work looking for a new job – rather, when they are presented with the option of being laid off they can collect EI benefits and there’s a possibility of recall, although they may not be enthusiastic about it of course, many employees are wiling to accept that as a preferable alternative.
Stuart: Sometimes companies will have counsellors and support available when there’s a large termination like this – are there any responsibilities or best practices companies should consider doing if they are having to do a mass termination or layoff remotely?
Ellen: I think you can always provide the contact/link information to your EAP, Employee Assistance Plan, if you have one. There are always going to be the kinds of job support – you know Knightsbridge-esqu organizations available virtually and supplying that contact information as soon as possible can be helpful but the reality is that no one is going to be doing any of this in person in the short term. And that includes interviews. So it’s really going to be a hard time for those who have lost their jobs.
Stuart: Dan if there’s a company that is looking at temporary layoffs, is there anything they can do to subsidize their employees to make up the difference between their salary and EI?
Dan: Yes there is. The EI system allows for SUB plans – Supplementary Unemployment Benefit plans. Ordinarily if an employee receives wages while collecting EI, the amount of wages they receive serve to reduce the EI benefits payable. There is some provision for working while on EI – you can earn a certain amount during which for every dollar you earn your EI benefit is reduced only 50 cents. But above a certain threshold every dollar you make reduces your EI benefits by a dollar, so then it becomes a self-defeating situation for the employee. However if you submit an application with a SUB plan to Service Canada and get approved you can top up your employee’s EI to a max of 95% of normal earnings. So for employers who have the resources to do that but not the work to keep employing employees, you can put them on temporary layoff, they can collect EI, and with approval of the plan you can make the top-up payments to help out the employee.
Stuart: If a company is doing temporary layoffs, how long can they lay that person off before a decision has to be made to either recall or terminate their employment?
Dan: Well the primary distinguishing factor tends to be whether the employee has benefits coverage such as group extended health and dental and whether or not the employer covers and continues that coverage during the temporary layoff. If benefits continuation is not provided then the layoff becomes permanent after 13 weeks of layoff in any period of 20 consecutive weeks. But if benefits coverage is continued during the temporary layoff then the layoff can last 35 weeks in any period of 52consecutive weeks before it becomes permanent. Also – if you hit the 13 or 35 week threshold, it’s up to the employee to say my layoff has now become permanent – I want my termination entitlements. It’s open to the employee to say I’d rather continue to wait and I’ll accept an extended layoff in the hopes you will recall me again in the near future.
Stuart: Maybe we can now end with some general advice for people who are being affected and for companies. Ellen: any general advice for employees or individuals?
Ellen: I do and it’s probably not what most people want to hear but it’s: take what you can get right now and see where we are in a couple of weeks or months depending how long this lasts. It’s more important you preserve an opportunity for August, September, October, than it is to squeeze every last dime out of your employer right now. And unfortunately the employer is probably aware they have a lot of bargaining power in this circumstance, but we will be keeping track of who treats their people well in this period and who doesn’t and that will be the new interview question in a post-Covid world.
Stuart: And Dan – any general advice for companies that are facing challenges right now?
Dan: I think I’d go back to the point of communication with employees being key. The more effectively you can communicate with your employees during these difficult times the better you are able to keep them up to date, just as employers are facing uncertainty, employees are facing uncertainties as well. So maintaining a good, solid relationship with your employees, even if you are not able to keep employing them for a period of time will pay off in the long term. Hopefully business will pick up, hopefully employees will be back to work and employees feel their employers communicated clearly and effectively with them during difficult times and hopefully will be more loyal than ever.
Stuart: Thank you Ellen and Dan for your time today. Thanks to my guests today, Ellen Swan and Dan Black. If you would like more information about Caravel Law or about this podcast please check us out at caravellaw.com. And if you would like any help with any situations you are facing, please reach out to info@caravellaw.com. Hopefully we will be back with some new episodes of the podcast soon. Until then, I hope everyone listening to this podcast is able to stay safe, healthy and isolated as we’ll get through this situation together. Thank you very much.
— Disclaimer: These materials are not intended as legal advice. It is also impossible to cover all relevant details, and available rights and remedies will depend on the unique facts of each situation. For specific advice, please speak with your qualified legal counsel before making any decisions or taking any action. Additionally, the situation is extremely fluid and is changing on a daily basis. As things evolve, your best course of action could also evolve so please follow up-to-date and reliable sources for your information.