April 1, 2020

McLennan Ross Update for Wednesday

By McLennan Ross Labour & 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.

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