Employers have been reeling from the challenges posed by COVID-19 and related economic disruption since March. This article discusses three key COVID-related issues they face over the next year under the pandemic “new normal.”
Deemed termination for temporary layoff employees
Many employers placed their employees on temporary layoff during the pandemic’s first phase. Some employees remained laid off through the summer and into the fall. After initially extending the permitted duration of layoffs, the B.C. government reinstated the pre-COVID 13-week time limit on layoffs effective August 30. If your organization still has employees on layoffs it wants to recall, there a few options to consider:
a) If your organization is eligible for Canada Emergency Wage Subsidy (CEWS), recall the employees either to “inactive” status or on modified hours or duties financed by the subsidy. However, employees must agree or tacitly accept such arrangements, particularly where their pay is reduced;
b) Seek a “variance” from the government to allow your layoff to continue. The employer will need the support of at least 51% of the affected employees and must provide a recall date or a reasonable date for the resumption of partial or full operations. The decision to grant the variance is still discretionary but the government is expediting decisions;
c) Try to reach an informal understanding with the employees that they will continue on layoff without claiming severance. While not legally binding, such arrangements can help defer severance obligations.
Without such strategies, employers are deemed to have terminated their employees when the 13 weeks expired, exposing them not only to Employment Standards Act (ESA) minimum severance but also, in most cases, much more onerous contractual severance.
Special COVID leave rights of parents and caregivers
When the government created a special COVID-related leave under the ESA, one category was for employees, who, “in relation to COVID-19” are “providing care to an eligible person,” being children, including certain dependent adult children. The legislation gives the example of an employee required to provide such care because of the closure of a school or daycare.
However, based on the wording, it would appear to allow parents who decide to keep their children out of school based on general COVID-19 fears to stay on such protected statutory leave even when their child’s school or daycare has reopened. The leave can continue as long as pandemic emergency continues.
As with other ESA leaves, employers must not terminate the employee’s employment or change any condition of his or her employment. Furthermore, they must reinstate the employee to the position he or she held prior to taking leave or a comparable one. Employers cannot challenge the parent’s decision to keep his or her child home nor require employees to make other care arrangements. For small businesses and employees in key roles, this can impose a real hardship.
Extension of CEWS and expanded CEWS wage subsidy formula
The main government support for struggling employers, the CEWS wage subsidy, was recently extended and expanded.
The federal government has announced it plans to extend CEWS until at least June 2021. More importantly, under new rules in force since September, employers suffering less than a 30% drop in revenue compared with the previous year can now apply and receive a pro-rated subsidy.
While the new CEWS rules are too complex to summarize here, they allow far more COVID-impacted employers to receive subsidy by introducing:
a) more flexibility in measuring the employer’s drop in revenue in each four-week CEWS period, including a special rule grandfathering previous subsidy levels for some employers;
b) a sliding scale of subsidy rates depending on the severity of revenue loss; and
c) eliminating the requirement that participating employees not have 14 days or more in the CEWS period with no earnings.
Many employers who did not meet the original 30% drop in revenue impact threshold can now apply and receive a subsidy on all wages paid. Applications can be made retroactively until January 31, 2021. Employers are subsidized on all wages, not just those paid to employees who are on furlough or who might otherwise have been laid off.
As the first two points above demonstrate, employers continue to face significant liabilities and burdens due to COVID. The extension and expansion of CEWS can help offset some of the economic losses they are experiencing. •
This article is a general summary and does not constitute legal advice.
J. Geoffrey Howard is principal and founder of Howard Employment Law. Sebastian Chern is an associate at Howard Employment Law.
