Due to the ongoing economic impact of the COVID-19 pandemic many companies in the Tri-Cities are implementing measures to ensure their financial stability during the crisis. Unfortunately, this often means making difficult decisions about staff and compensation. Already, many companies have temporarily laid off or reduced the wages of their employees, and many more are contemplating it as this crisis continues. Employers should be wary that any such measures may trigger claims under constructive dismissal or contract.
The Employment Standards Act currently allows for temporary layoffs not exceeding 13 weeks in a consecutive 20 week period. The Act does not, however, give employers the right to temporarily lay off any employee. Unless temporary layoffs have been considered in your employment contract or collective agreement, any such layoff may lead to a claim for constructive dismissal.
We have discussed constructive dismissal in the past HERE. Briefly, a constructive dismissal occurs when an employer unilaterally changes the terms and conditions of the employer/employee relationship. The changes must be significant, but any change in compensation can lead to a successful claim. By unilaterally changing an employee’s salary or wages or laying them off, even during the Covid-19 crisis, you risk that employee claiming they were in effect terminated and demanding severance.
Claims in contract may arise where an employee is paid less than what they are owed under the employee contract. Such claims will be specific to their situation but can arise from a reduction in wages.
To reduce your liability it is important that you receive your employees signed consent to any layoff or wage reduction. The situation is difficult for everyone, but these temporary measures allow a company to stay afloat while also guaranteeing a position for employees after we return to normal.
Not only is the pandemic constantly evolving, but every employer and employees situation is unique. It is important you seek legal advice prior to make any decision regarding your employees.