The COVID-19 pandemic has led to a global economic crisis. As you try to keep your small business afloat right now, you may be thinking of temporarily laying off workers or reducing their hours of work. If your staff are already laid off, you may need to extend the temporary layoff. Or you could be planning to reorganize your workplace before reopening your business.
As you weigh your options, it is important that you understand the relevant legislation. Being aware of potential risks may help avoid unnecessary legal disputes, such as a constructive dismissal claim.
What is a constructive dismissal claim?
When an employer changes the major terms of employment without any contractual rights or the worker's consent, it is a constructive dismissal. Major changes include changing the worker's position, salary, working hours or location.
It also includes cases where an employer forces an employee to quit by creating an intolerable work environment.
In both cases, it is deemed to be a termination of the employment. The employee is then entitled to severance pay.
How can I avoid a constructive dismissal claim?
Understand the law on temporary layoffs in your province
The employment standard legislation in every province allows employers to temporarily layoff employees. However, there is a maximum permissible length for temporary layoffs. This maximum duration varies from province to province.
In Alberta, it is normally 60 days in a 120 consecutive day period. This duration has been temporarily extended to 120 days due to the pandemic.
In British Columbia, the permissible period is 13 weeks in a 20 consecutive week period. Due to COVID-19, it has been increased to 16 weeks provided your employee consents.
In Ontario, the duration is 13 weeks in a 20 consecutive week period. In some provinces, like Ontario and Alberta, the maximum duration can be extended if the employee consents to receive wages or benefits in lieu of a fixed limit to the layoff.
Temporary layoffs that exceed the maximum permissible duration are considered terminations of employment.
Please note that the legislation alone can't be a buffer from constructive dismissal claims. Unless the job contract gives you the right to temporarily layoff an employee, you are never completely protected. However, the practical risk of a constructive dismissal claim due to a temporary layoff in a crisis like the current one is low.
Review employment contracts
As you prepare to reopen your business, you may be considering reducing the wages or hours of work of your staff. It is important to review the employment contracts before doing so.
It is not advisable to make major changes to terms of employment without contractual rights or your employee's consent.
Be transparent with your staff
Let your workers know the challenges your business is facing and the plan going forward. If they understand the need for the temporary layoffs, they are less likely to consider drastic measures such as a constructive dismissal claim.
If you are temporarily laying off select employees, make sure the criteria for doing so is objective and not discriminatory. For example, do not layoff an employee who is on a COVID-19 related emergency leave. It is possible that COVID-19 will be regarded as a disability for the purpose of human rights legislation.
Support employees through government programs
The government of Canada has introduced several economic measures to support businesses. Make use of programs such as the Canada Emergency Wage Subsidy. The Work-Sharing program is another measure created to reduce layoffs.
Still have questions on constructive dismissals?
Our HR experts can help you update work contracts and follow best practices to avoid such claims. For advice on staff management during the COVID-19 pandemic, call our experts today: 1 (833) 247-3652