COVID-19 Crisis – Information for Employers Considering Layoffs

Last Updated March 20, 2020

There’s no question the COVID-19 pandemic is hitting the tourism and hospitality industry hard.  The timing is incredibly inopportune as the crisis comes just as employers were gearing up for their important and busy summer season.

The global pandemic leaves employers in our industry considering the unfortunate prospects of laying off staff, reducing business hours or service or even closing their doors completely.

Many employers are reluctant to let staff go because it was so difficult to find them in the first place in BC’s tough labour market; others believe they could retain staff if the disruption was brief but (like all of us) live with the uncertainty of not knowing when this crisis will truly resolve.  Many employers have already halted their recruitment efforts and are taking a “wait and see” approach before taking any decisions at all about downsizing.

In the days and weeks ahead, government may announce other relief measures and go2HR will get that information out as quickly as possible.

In the meantime, here are some options that are currently available to BC employers:

Temporary Layoff:

An employer may temporarily layoff an employee if the ability to layoff is:

  1. expressly provided for in the contract of employment or
  2. implied by well-known industry-wide practice (e.g. logging, where work cannot be performed during “break-up”); or
  3. agreed to by the employee.

The Employment Standards Act limits temporary layoffs to 13 weeks.  If an employer goes beyond this timeframe (or if none of a, b or c are present) the layoff may be deemed a termination.  There is a live question as to whether the Employment Standards Act provides an exception to this in ‘unforeseen circumstances’.

In a unionized workplace a right to layoff may be found in the collective agreement.  Even where no such right exists, employers may be able to negotiate terms of layoffs (this has been happening across many industries as a result of the pandemic).

Termination:

When considering whether to terminate employees, there are several factors that employers should take into account, including their employees’ welfare.  Failing to do so at a time like this may injure your business significantly (public shaming of employers has been commonplace during this crisis) and, more importantly, subject your employees to harm.

Where employers are forced to terminate employees, without cause termination requires the provision of notice or pay in lieu of notice.  The amount owed to an employee can be significant and it may greatly exceed the minimum requirements of the Employment Standards Act.  It is worth noting here that an employee may have contractual entitlements and/or rights at common law to increased notice.

There is a live question as to whether the Employment Standards Act might allow for employers to lay off and/or even dismiss without cause, notice or pay in lieu in the event the pandemic is found to be an ‘unforeseeable event’.  Without a determination in this regard (and given the other sources of potential liability including the common law and the employee’s written contract, if any) a dismissal without cause or notice should be viewed as high risk.

Any employer considering dismissals at this time should reach out to legal counsel (see below).

Employment Insurance for Dismissed Employees

Laid-off or terminated employees can apply for Employment Insurance (EI) benefits, which typically kick in after a waiting period.  The federal government announced on March 18, 2020, that it would be relaxing the requirements to qualify for EI given the crisis and that it was working to provide emergency support benefits to people losing their job (likely for a 14 week period).  More details of this are expected in the coming days.

Some requirements have already been waived for new EI claimants who are quarantined, can’t work and don’t have sick leave benefits including the waiting period.

Work-Sharing:

Work-Sharing is a federally-run adjustment program designed to help employers and employees avoid layoffs when there is a temporary reduction in the normal level of business activity that is beyond the control of the employer. The measure provides income support to employees eligible for Employment Insurance benefits who work a temporarily reduced work week while their employer recovers.

Work-sharing is only available in some circumstances including on approval of Service Canada at least 30 days in advance.

Effective March 15, 2020, Service Canada has waived the mandatory waiting period between agreements and has extended the maximum duration of them to 76 weeks.  These measures apply to businesses suffering a downturn who have or will have work-sharing agreements in effect between March 15, 2020, and March 14, 2021.

Other ideas?

In addition, employers that go2HR has been in contact with have a variety ideas including:

  • outsourcing their staff to other employers who need their skills (e.g. restaurant/kitchen or housekeeping staff to hospitals, retirement homes and other institutions; customer service staff to financial institutions etc.)*
  • offering unpaid leaves of absence*
  • asking for voluntary layoffs*
  • asking for voluntary reduction in wages or hours of work*

*Many of these need careful implementation (and the assistance of legal counsel) and/or may be impossible in workplaces with a collective agreement. That said, solutions to the unprecedented crisis faced by the world today may come from unexpected places and ‘outside of the box’ thinkers. Accordingly, we would like to hear from you if you have any other suggestions or ideas to share.

go2HR is also pleased to partner with the healthcare sector to allow healthcare employers (including private care homes and retirement residences) to use the go2HR Job Board for their hiring needs. This will help displaced tourism and hospitality employees find temporary work, to ensure their livelihood is not disrupted.

We recognize that these are challenging times, and go2HR is here to help you if you have any other questions or concerns.

This article was contributed to by Cameron R. Wardell, a partner at Mathews, Dinsdale & Clark LLP. Mathews Dinsdale has a variety of resources for employers during the COVID-19 crisis including updated articles, webinars and a 24/7 COVID-19 Employer Support Line.