We are barely a few weeks into seriously dealing with the containment of COVID-19 pandemic and it already seems like most businesses have been hit by an economic tsunami. Never before have we seen the economic upheaval and uncertainty that has arisen in the past seven days.
Instead of looking ahead with their usual optimism, owners are now significantly reducing their business’ operations or closing them (hopefully temporarily) as a result of government actions or the fact that people have stopped buying.
Understandably, we are starting to have difficult conversations with some of our clients about these issues and are providing information for your consideration and guidance if you deem it necessary to lay off employees.
Layoffs and termination are governed by the British Columbia Employment Standards Act (“ESA”).
Termination with Just Cause
Just cause provides an exception to the notice or compensation requirements. This requires the employer to prove the cause for termination.
Full Termination without Just Cause and No Possibility of Future Call
An employer is required to provide the employee written notice or an amount of pay based on the employee’s length of service with the business. A combination of both notice and pay is also acceptable if it meets the guidelines prescribed by the ESA.
An employee who has been employed by a business for three months must receive a minimum of one week’s notice or pay.
An employee who has been employed for one year must receive two weeks of notice or pay.
Those employed three or more years must receive three weeks of notice or pay plus one-week additional notice or pay for each additional year of employment to a maximum of eight weeks.
Written notice cannot begin if an employee is on vacation, a current leave, a temporary layoff, strike, lockout or unavailable for work due to medical reasons. Employers must wait for the employee to return to work before giving notice or compensate them accordingly while away from work.
Layoffs
Pursuant to the ESA, an employee is laid off when they are given less or no work, with the plan that the employee will return to a regular work schedule. If an employee’s hours are reduced to where they earn less than 50% of their weekly rate, they are considered laid off and the employer must provide written notice or pay compensation as noted above.
Some layoffs are considered temporary if:
- It is part of an employment contract;
- It is a normal part of the industry (i.e. closure of a ski hill at the end of the season);
- The employee agrees to it.
For non-union businesses, temporary layoffs cannot last more than 13 weeks in a 20-week period. If it lasts longer, the layoff becomes a termination of employment and the employer must provide compensation equal to the amounts noted above.
Please note that the notice period and compensation payments are the bare minimum as prescribed by the ESA. Additional compensation often may be required if imposed by a Court or Tribunal or agreed to by the employee and employer to avoid a dismissal claim.
It is not known whether the provincial government will provide any emergency modifications to the ESA during this current, unforeseen economic downturn.
In its recent Economic Response Plan to COVID-19, the federal government outlined various actions for how it will assist businesses and employees during these trying times. We previously summarized the plan and communicated it to our clients on March 19, 2020.
For those businesses experiencing a slowdown and doing everything within their control to avoid layoffs, we will be providing a memo on March 24, 2020, on the Work Sharing Program.
For those businesses finding that they have no choice but to lay off employees, we will be providing additional information on March 24, 2020, to assist your internal bookkeeper/accountant with:
- preparing employees’ final payments
- preparing Record of Employment (“ROE”) forms
- helping your employees apply for Employment Insurance benefits.
Stay safe during these trying times and don’t hesitate to reach out for help or if you just need someone to talk to because we are always here for you!
Regards,
A-R PARTNERS