April 3, 2020

McLennan Ross Update for Friday

By the McLennan Ross Labour & Employment Team

What we are seeing

  • The Government of Alberta and the Law Society of Alberta jointly announced the execution of a Ministerial Order suspending limitation periods found in most government legislation and the regulations enacted under that legislation. Important details of the Ministerial Order include:
    • The commencement date of the suspension is retroactive to March 17, 2020;
    • The period of suspension ends on June 1, 2020;
    • The period between March 17, 2020 and June 1, 2020 shall not be counted for the purpose of any limitation period;
    • The suspension, assumedly for any action, claim or proceeding which has already commenced, is “subject to the discretion of the court, tribunal or other decision-maker”, which seems to mean that this general Ministerial Order can be overridden by a specific order or direction given in that action, claim or proceeding;
  • The list of legislation is comprehensive and 3.5 pages in total. Of note is that it includes the Limitations Act, which sets the time-frame to commence a court claim, the Alberta Human Rights Act and the Judicature Act, which is the enabling statute for the Alberta Rules of Court. Notably absent from the list of legislation are the Employment Standards Code and the Labour Relations Code.  
  • Included in the list of legislation is the Age of Majority Act. This will be sad news for anyone turning 18 between March 17 and June 1, 2020.

What we are hearing

  • As further details regarding the Canada Emergency Response Benefit ("CERB") are disclosed, it appears the Government of Canada’s initial promise that the benefit would be available to applicants who were unable to find a job or had a job offer withdrawn due the COVID-19 has been withdrawn. According to the official website, an applicant “must have stopped working as a result of COVID-19 and be without employment income for at least 14 consecutive days within the initial four-week period.”  
  • This is an extremely troubling development for employers who had been forced to rescind firm offers of summer employment but were given some comfort that affected employees could apply for the CERB. How the Government of Canada now expects students to earn money to pay for tuition and expenses in the fall is not clear.

What we are saying

  • Although most temporary layoffs have occurred within the last 2 weeks, employers are already predicting that the layoffs will have to be extended beyond the initial 60-day period permitted under the Employment Standards Code. Subject to any future interim relaxation or changes to the Code, the Employment Standards Board has taken the view that consent of the employee is required for any such extension. According to the Board’s website, “[t]he period of temporary layoff can be extended beyond 60 days if the employer makes regular payment to or on behalf of the employee, such as continuing to pay wages, employee pensions or benefits and the employee agrees to these payments in lieu of a firm limit of the length of the layoff.”

April 2, 2020

McLennan Ross Update for Thursday

By McLennan Ross Labour & Employment Team

What we are seeing
  • The Government of Canada has finally announced the details for its proposed 75% wage subsidy program. The press release can be found here.
  • The following are some key takeaways:
    • Most businesses are eligible, with only public bodies being specifically exempted. The Government has indicated it will work with non-profits and charities to ensure the program eligibility requirements do not exempt them; 
    • The subsidy will be provided for up to 12 weeks retroactive to March 15, 2020;
    • Entitlement to the subsidy for the 3 four-week claiming periods will be measured by comparing monthly revenues for March, April and May 2020 with the corresponding monthly revenues for 2019. If an applicant company was formed after the applicable months in 2019, past monthly revenues will be compared to provide a reasonable benchmark; 
    • Employers will be eligible for a subsidy of up to 75% of the salary and wages paid to employees with the maximum subsidy being $847 per week per employee, including new employees, with no limit on the total subsidy paid to any employer. The subsidy will assist up to $58,700 in annual salary; 
    • The subsidy can be calculated on the employee’s current or pre-crisis remuneration, whichever is greater, with further guidance on how to determine pre-crisis remuneration to be provided shortly; 
    • Certain elements of remuneration will be exempted, as will severance pay, and special rule will apply to employees who are not arms-length from the employer (i.e., an owner-operator) 
    • Employers will have to make best efforts to top-up the remaining 25% of the eligible employees’ salaries. 
    • Any subsidy amount received by an employer will be considered government assistance and is to be included in the employer’s taxable income. Further, as amounts received are reimbursement of wages paid, statutory remittances on the wages themselves, including funded by the subsidy, still must be paid. 
    • It appears that applications will be processed without strict review of supporting financial information from the employer to verify eligibility. Amounts paid out to businesses who applied in good faith but who are subsequently determined to not qualify will have to be repaid. Penalties will be applied in cases of fraudulent claims. 
    • The Government may create new offences that will apply to employers who provide false or misleading information to obtain access to this benefit or who misuse any funds obtained under the program. The penalties may include fines or even imprisonment so will appear to apply not only to the employer as an entity, but also to a person who knowingly submits a fraudulent application on behalf of an employer.
  • Details regarding the application process are still to be released; however, employers will apply through the CRA’s My Business Account website. It appears that the portal to apply may not be open for approximately 6 weeks so employers should be prepared to wait up to 2 months before receiving the subsidy. The Business Credit Availability Program (BCAP) may be able to provide short-term liquidity for employers until the wage subsidy amounts are received. See details regarding the BCAP here
  • Although previously stated be a replacement for the temporary 10% wage subsidy program announced earlier, it appears both programs will remain; however, if an employer is eligible for both programs, any benefit from the 10% wage subsidy would generally reduce the amount available to be claimed under the 75% subsidy for the same period. 
  • As the Canada Emergency Response Benefit (CERB) to be provided to employees requires the applicant employee to have lost all income, these two programs cannot overlap. In other words, as per the press release, an employer would not be eligible to claim the 75% subsidy for remuneration paid to an employee in a week that falls within a 4-week period for which the employee is eligible for the CERB. Employers who are not eligible for the 75% subsidy would still be able to layoff employees who will receive the CERB.
What we are hearing
  • Government bodies appear to be still attempting to move matters forward, perhaps acknowledging the escalated demands which will be placed on them following the end of the current state of emergency. McLennan Ross LLP has continued to receive correspondence from the Alberta Employment Standards Board, the Court of Queen’s Bench, the Labour Relations Board, and the Alberta Human Rights Commission on outstanding matters. We expect this will continue so employers should expect that they may still be required to give instructions to legal counsel and to participate in hearings and meetings, albeit remotely.
  • We continue to watch for possible amendments to Alberta Employment Standards requirements, as has occurred in other provinces. This may occur very soon.
What we are saying
  • Some employers are having to terminate employees for reasons other than the pandemic or are faced with employees who have effectively resigned by subjectively refusing to attend at work despite there being no incidence of COVID-19 infection in the workplace. The question arises as to what information to provide on the departing employee’s Record of Employment (ROE) . We have provided some earlier guidance on completing ROEs here
  • Notwithstanding the pandemic and a desire to put the departing employee in the best position to apply for the CERB or for Employment Insurance benefits, we strongly advise against completing the ROE in a way which is not reflective of the true circumstances surrounding the employee’s departure. Not only is it important to be truthful on government documents, indicating that an employee was laid off or terminated in the circumstances when it was a resignation could create severance liability for the employer down the road. As with most things, honesty is the best policy.

April 1, 2020

McLennan Ross Update for Wednesday

By McLennan Ross Labour and Employment Team

What we are seeing
  • The Government of Canada originally indicated that it would be announcing the details for its proposed 75% wage subsidy by the end of March. It has now been announced that details will be provided on April 1, 2020. We will provide a summary of the program tomorrow if the details are indeed released when promised.
  • The Government of Canada has updated its website with respect to the Canada Emergency Response Benefit (CERB):
    • Application for the CERB will be online, and although not yet accessible, it appears that in order to apply, an applicant must be registered through CRA My Account. Information on this can be found here.
    • Once registered, the CRA provides  a security code to the registrant. The Government is recommending that anyone considering applying for the CERB register for a CRA My Account immediately. For more information, click here.

What we are hearing

  • As many energy companies have already cancelled or reduced capital expenditures for 2020, corresponding reductions in employees are starting to be announced. The Government of Canada had indicated last week that it would be announcing an aid package for the energy sector, and that help would be hours or days away. The Government has now described the aid package as a work in progress with announcements not being expected this week. According to news reports, the Government would like to first see the impact of the 75% wage subsidy program, which has not yet been implemented and even the details of which, as stated above, have yet to be announced.
  • The City of Toronto has cancelled all city events and event permits until June 30, 2020, stating that it needs to take this step to ensure the health of its citizens, including essential workers and vulnerable people. The cancellation does not affect sporting events, although even if the NHL season were to resume, there is no way the Maple Leafs would be playing into June in any event.

What we are saying

  • There has been significant reliance on temporary layoffs by some employers to manage short-term labour costs during the pandemic. Other employers are implementing less drastic measures to control labour cost, such as reductions in base salary or hours worked, elimination of perquisites, and other changes to the remuneration package received by employees. Just as with a temporary layoff, however, the issue again arises with respect to which changes can be implemented by the employer on its own and which changes could lead to a constructive dismissal claim if not agreed to by employees, either expressly or through conduct. Effective communication is key to managing these changes and minimizing claims.
  • Legally, even in times of economic hardship, an employer cannot unilaterally implement material changes to a contract of employment. What is material may vary from employee to employee – for example, changing hours of work may not be material for one employee but may be material for a single parent with specific childcare arrangements. For elements of the employment contract which are more easily measured, such as compensation, materiality is easier to assess, with a 10% or greater reduction in the value of total compensation being a good barometer of a material change (changes of less than 10% may also be material). 
  • If an employee is the recipient of a material change in the terms and conditions of employment, that employee’s option is to reject the change and claim constructive dismissal or condone the change by continuing to work under the new terms and conditions of employment. The rejection by the employee does not have to be immediate, but must be communicated within a reasonable period of time. In this economic climate, practical considerations by the employee may outweigh the enforcement of strict legal rights, as most employees should prefer to still have a job, albeit with reduced hours or compensation, than be unemployed and pursing a constructive dismissal claim.
  • If an employer wants to be informed about the short and long-term implications of imposing changes to the employment relationship, experienced employment counsel should be consulted.

March 31, 2020

McLennan Ross Update for Tuesday

By McLennan Ross Labour and Employment Team

What we are seeing
  • As we mentioned in our blog yesterday, the Government of Canada announced on March 27, 2020 that it was increasing its small business wage subsidy from 10 percent to 75 per cent for qualifying businesses for up to 3 months, retroactive to March 15, 2020. The Government promised that more details on eligibility criteria would be announced prior to the end of March. Although we are still waiting for a formal press release, Prime Minster Trudeau provided some additional details during his press briefing on March 30, 2020:
    • The subsidy will be available for all business irrespective of size;
    • In order to qualify, a company must experience a decrease in revenues of at least 30%;
    • The Government will cover up to 75% of a salary on the first $58,700, which could mean payments of up to $847 a week. 
    • The Government will encourage businesses to top up their employees’ wages with the remaining 25% of their salaries.
  • We will be interested to see the guidance from the Government regarding how to calculate the 30% decrease in revenue, especially for businesses whose requests for goods or services are down dramatically but revenue realization generally occurs more than 30 to 60 days after completing a job order. 
  • We are also waiting to see if the 10% wage subsidy program, which was different in terms of quantum of benefit, but also in implementation, effective date, and the businesses which qualify, is withdrawn or if it is still available for companies which do not meet the 30% decrease in revenue requirement, either immediately or at all.

What we are hearing
  • There continue to be temporary changes made to Employment Standards legislation across the country. For example, British Columbia, Ontario, Saskatchewan, and Alberta all introduced a two-week job-protected leave if an employee had to self-isolate or was caring for a dependent required to self-isolate. Manitoba very recently announced a temporary exception to its Employment Standards regulations to give employers more time to recall employees laid off as a result of COVID-19. Under its existing Employment Standards legislation, employees who have been laid off for 8 or more weeks in a 16-week period were deemed to be terminated and entitled to wages in lieu of notice. The Province introduced temporary amendments that would ensure any period of layoff occurring after March 1, 2020 would not be counted toward the period after which a temporary layoff would become a permanent termination. We expect the Government of Alberta will similarly extend the layoff period before a deemed termination occurs.
  • The Chief Medical Officer has changed one of her instructions about people who are quarantined being allowed to go outside. While this was previously allowed, people in mandatory self-isolation are now prohibited from leaving their homes even to walk in their neighbourhood. Such people can get fresh air in their backyard, as long as they stay on private property. People who live in an apartment building or high-rise must stay inside and cannot use the elevators or stairwells to go outside. If their balcony is private and at least 2 meters away from the closest neighbour's, they may go outside on the balcony.

What we are saying
  • There is some uncertainty as to whether parties continue to have the obligation to move court actions forward despite court access being limited to urgent or emergency matters. The Court has suspended all “filing deadlines” found in the Alberta Rules of Court. Whether this suspension applies to deadlines which do not involve the filing of documents is not clear. For example, the Rules require a plaintiff to serve an Affidavit of Records within three months of receipt of a filed Statement of Defence, with a defendant’s Affidavit of Records due two months after receipt of the plaintiff’s Affidavit of Records. The Affidavit of Records is not filed before it is served. As such, it is not clear whether the direction of the Court suspending filing deadlines applies to service of an unfiled Statement of Defence. There is a penalty imposed on any party which does not meet its deadline for service of the Affidavit of Records; however, the Rules do say that the penalty will not be assessed if the party has “sufficient cause” for not meeting the deadline. It is probably that the Court will find a state of emergency due to a pandemic qualifies as sufficient cause.
  • Even if there is no obligation of the parties to move litigation forward, there may be practical reasons to do so. There will inevitably be a backlog of applications and appearances once the courts reopen and matters which were previously adjourned are rescheduled. This backlog will only exacerbate the demand on judicial resources already stretched thin prior to the pandemic. There may also be no more optimal time to focus on the issues in litigation while other business demands are lessened. Finally, claimants may be more willing to compromise and accept a reduced but certain amount as opposed to holding out for a higher amount, which will require waiting for the claim to make its even longer way through the court process to trial.

March 30, 2020

McLennan Ross Update for Monday

By McLennan Ross Labour and Employment Team

What we are seeing 
  • Late in the day on Friday, March 27, 2020, the Government of Canada announced that it was increasing its small business wage subsidy from 10% to 75% for qualifying businesses for up to 3 months, retroactive to March 15, 2020. The Government promised that more details on eligibility criteria would be announced prior to the end of March. Under the previous program, businesses were eligible “if their taxable capital employed in Canada for the preceding taxation year, calculated on an associated group basis, was less than $15 million.” The subsidy was to be provided through employers reducing their current remittance of federal, provincial, or territorial income tax to be sent to the CRA by the amount of the subsidy. It remains to be seen if these details will remain the same or be adjusted now that the subsidy is significantly more than the 10% previously offered.

What we are hearing
  • On March 27, 2020, the Court of Queen’s Bench of Alberta issued further restrictions on courthouse access across the Province. See these updated restrictions here.
  • These new restrictions are in addition to the suspension of all hearings other than emergency or urgent matters which was implemented on March 20, 2020, with requests for such emergency or urgent hearings submitted online for consideration before a hearing date is granted.
  • The Alberta Court of Appeal conducted its first wholly electronic appeal hearing today.  McLennan Ross’ own Gerhard Seifner was one of the lawyers involved, appearing in the traditional lawyer’s gown, but online. The hearing proceeded very smoothly.  

What we are saying
  • With the ever changing list of support programs being provided by the Governments of Alberta and Canada to struggling employers, and with the details of those programs still often either undefined or untried, employers are continually having to re-evaluate the best options for surviving the economic impact of the pandemic and being ready to operate once the state of emergency is lifted. Whether to temporarily layoff, mass terminate, job share or rely upon wage subsidies is a complex decision with the best strategy for one business not guaranteed to be the same for another business. Considerations include:
    • The number of employees affected;
    • The possible statutory and common law obligations owed to any terminated employees;
    • The ability to attract quality candidates once demand for employees re-occurs;
    • The need to continue to operate as an essential service or workplace during the pandemic; and
    • The ability to be compensated by customers for the services rendered.
  • For these reasons, we recommend discussion with the appropriate professionals, including experienced employment law counsel, to best understand the implications of each option before making any significant workforce decisions.

March 27, 2020

McLennan Ross Update for Friday

By McLennan Ross Labour and Employment Team

What we are seeing 
  • Since the commencement of the COVID-19 pandemic, the Canadian Government has announced a number of Employment Insurance changes as well as two new programs meant to assist those who don’t qualify for EI. Those two programs were streamlined on Wednesday afternoon into a single benefit — the Canada Emergency Response Benefit (CERB). The Government’s news release, link available here, is sparse on CERB details, but it appears that the benefit will be administered as follows:
    • Anyone who has made at least $5,000 in the previous 12 months or the previous tax year and who has lost their income for any reason due to COVID-19 is eligible for the CERB.
    • The purpose is to ensure that no one who had income and has had that income interrupted is going to go without having access to any funds. As for what counts as income loss due to the COVID-19 pandemic, it appears to be intended to cover most situations, such as if employees have been laid off either directly or indirectly as a result of the current economic situation, if employees are sick, if a child is home from school and an employee must be home to care for them, if employees are caring for a sick family member, if employees feel they must self-isolate due to risk factors, if employees are experiencing mental-health issues as a result of the pandemic, and so on.
    • People can keep their jobs and still be eligible for the CERB, but they must not be receiving payment, which indicates that the CERB cannot be supplemented by the employer. Despite that limitation, the intention appears to be that employers and employees can maintain a connection, and employees can receive the CERB for the next 4 months and then restart their employment when the economy moves back towards normalcy.
    • It appears that this benefit will be in addition to existing benefits under the EI program; however, applicants cannot receive both the CERB and EI benefits at the same time.
    • All those eligible for the CERB, regardless of how much they made before, will get $2,000 per month, paid bi-weekly for a period of up to 16 weeks. The eligibility period ends on October 3. The earliest people can expect to see the first benefit cheque arrive is around April 9 and the latest is around April 20.
    • Canadians will be able to apply for the CERB through a Service Canada online portal at a link that will be published widely when the site goes live, as well as over the phone or in person, where available.

What we are hearing 
  • The Government of Saskatchewan has made a determination of businesses that are essential and non-essential for the purposes of public operations. The list of Critical Public Services and Allowable Business Services is very broad (e.g., it includes all employees in a variety of fields, such as all production, processing and supply chains of the energy and oil and gas sectors). Non-essential businesses are not prevented from operating, but they are required to close public operations as of March 26 (they cannot offer “public-facing services”).
  • Here is a link to the list of Critical Public Services and Allowable Business Services in Saskatchewan.
  • The Government of Saskatchewan also announced further limitations on the size of public and private gatherings to a maximum of 10 people in one room. Exceptions are provided where two-metre distancing between people can be maintained, such as: workplaces and meeting settings where people are distributed into multiple rooms or buildings; and retail locations deemed essential.

What we are saying 
  • Many employers have had to issue layoff notices to a large number of employees in the past two weeks. If the employer does not recall the employees and proceeds to termination, this gives rise to a group termination notice requirement set out in section 137 of the Employment Standards Code that states that if an employer is intending to terminate the employment of 50 or more employees at a single location within a 4-week period, the employer must give the Minister of Labour and the affected employees (and any union) 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
  • Employers are rightfully concerned about these notice requirements and what financial liability they may create. We are waiting to see if there will be any relaxation of this requirement by the Government of Alberta. Absent such relaxation, there may be applicable exemptions under the Code and the Employment Standards Regulation which can potentially provide relief for employers from this notice requirement.

March 26, 2020

McLennan Ross Update for Thursday

By McLennan Ross Labour and Employment Team

What we are seeing 
  • It appears that the Canadian Government will be announcing financial support for the oil and gas sector this week. It is unclear what the support will entail and if it will be limited to loan interest relief and loan guarantees or will be something more substantive. 
  • The Government of Alberta has set up a website to provide information regarding its financial support for employees experiencing a loss of income resulting from self-isolation due to COVID-19. Click here. In order to be eligible, an applicant must have experienced total or significant loss of income and is not receiving compensation from any other source because the employee:
      • has been diagnosed with COVID-19;
      • has been directed by health authorities (Health Link 811) to self-isolate; or
      • is the sole caregiver of a dependent who is in self-isolation.
    • Those not eligible for the program include those employees who:
      • were not working immediately before being advised to self-isolate;
      • can work from home;
      • are not experiencing a significant loss of income as a result of self-isolation;
      • are currently collecting other forms of income support or employer benefits while self-isolated, such as: workplace sick leave benefits or federal Employment Insurance (EI) benefits;
      • are staying home to care for a dependent who is home for a reason other than self-isolation; or
      • reside outside of Alberta.
    • In the application questionnaire, “significant” loss of income is defined as more than 50%.

What we are hearing 
  • The Government of Alberta also announced that it would begin enforcing the Public Health Order due to non-compliance. Fines for violating an order can now cost as much as $1,000 per offence while courts will also be able to levy fines of up to $100,000 for a first offence and up to $500,000 for a subsequent offence for “more serious violations.” It appears that the Government is focused on individuals who are not following the Order by congregating in public places such as parks and not on businesses, either generally or those in the service industry that are subject to the prohibition from operating (such as bars and nightclubs) or are limited to 50% capacity or a maximum of 50 people.

What we are saying 
  • We are being asked regularly what an employer is to do with accumulated but unused vacation pay when temporarily laying off an employee under sections 62 - 64 of the Employment Standards Code. As stated earlier in our FAQ for Employers, Sections 62-64 of the Employment Standards Code permit employers to temporarily lay off employees. If an employee is laid off for 60 days in a 120-day period, the employee will be deemed terminated, and termination pay will be owing under the Employment Standards Code. Sections 62–64 do not require that the employee’s accumulated and unused vacation pay must be immediately paid to the employee in such a layoff situation. Section 38 of the Code allows an employer to require an employee to take vacation at a certain time provided the employer provides at least 2 weeks’ advance notice of such a direction; however, that does not apply while an employee is laid off. A consideration for the employee is that the receipt of vacation pay will likely affect the employee’s application for Employment Insurance benefits in that the commencement of the employee’s layoff period may be delayed by the value of the vacation time paid to the employee. Some employees may prefer to take the vacation pay up front (at 100% of normal wages) rather than Employment Insurance at a reduced rate, while other may prefer to continue holding the vacation pay so that it can be taken at a later date, such as when the employee returns to work or at the time of termination, if the employee is not recalled. An employer’s expected future solvency may also be a consideration for the employee. Although it is not necessary, we generally recommend providing the option to employees and allowing them to make the determination regarding the timing of receipt of the unused vacation pay.