Three Key Employer Challenges in the COVID-19 Era’s New Normal

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 employers face over the next year under the pandemic “new normal”.

Deemed termination for employees on temporary layoff

Many employers placed their employees on temporary lay-off during the first phase of the pandemic. Some employees remained on lay-off through the summer and into the fall.  After initially extending the permitted duration of lay-offs, the B.C. government reinstated the pre-COVID 13 week time limit on lay-offs effective August 30, 2020. If your organization still has employees on lay-offs it wants to recall, there a few options to consider:

1. If your organization is eligible for CEWS wage subsidy, 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;
2. Seek a “variance” from the government to allow your lay-off 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.
3. Try to reach an informal understanding with the employees that they will continue on lay-off 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 minimum severance but also, in most cases, much more onerous contractual severance. 

Continuing special COVID Leave rights of parents and caregivers

When the government created a special COVID-related leave under the ESA, one category that did not get a lot of drafting attention 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 their child’s school or daycare is closed. However, based on the drafting, 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 re-opened. The leave can continue as long as COVID emergency continues.

As with other ESA leaves, employers must not terminate the employee’s employment or change any condition of their employment. Furthermore, they must reinstate the employee to the position they held prior to taking leave or a comparable one.  Employers cannot challenge the parent’s decision to keep their 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 dramatically extended and expanded in scope. 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 details of the new CEWS rules are too complex to summarize here, they allow far more COVID-impacted employers to receive subsidy by introducing:

1. more flexibility in measuring the employer’s drop in revenue in each 4 week CEWS period, including a special rule grandfathering previous subsidy levels for some employers;
2. a sliding scale of subsidy rates depending on the severity of revenue loss; and
3. 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 wage subsidy on all wages paid. Applications can be made retroactively by January 31, 2021. Employers receive subsidy 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.

For more information about this, contact Howard Employment Law at ghoward@howardlaw.ca, 604.424.9686.