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COVID-19 – Frequently Asked Questions by Employers in the Northwest Territories and Nunavut

19-Mar-20

By McLennan Ross Labour & Employment Team

We have received a number of questions from our clients in the Northwest Territories and Nunavut on how they can respond to the COVID-19 outbreak. Below you will find answers to the most frequently asked questions from Northern employers.

1. Schools and daycares are closed. How do we balance our ability to run our operations with our employee’s responsibility to provide care to their children?

As of March 19, 2020, schools in the Northwest Territories will be closed until April 14, 2020. Daycares are permitted to remain open. In Nunavut, both schools and daycares will be closed until April 6, 2020.

Employees should be granted some flexibility to adjust to this significant and impactful change. Employees who have children should be afforded an opportunity to make alternate childcare arrangements, as this circumstance raises potential family status implications under human rights legislation.

In the short term, employers should consider whether it is feasible for employees to:

  • work from home;
  • use vacation or banked time;
  • bring their children to work;
  • modify shift schedules; and/or
  • allow employees time off work on an unpaid basis.

As in each family status accommodation case, employers should assess each employee’s circumstances and requests for accommodation on a case-by-case basis. Employers should be clear with employees about the extent of the accommodations that can be provided without causing undue hardship. Employees who cannot be accommodated at work at this time should be granted an unpaid leave. Over the long term, there will be an increased obligation on the part of the employee to secure alternate childcare.

See COVID-19 – Family Status Accommodation and Employer Obligations for more information.

On March 18, 2020, the Government of Canada announced new measures that will impact employees with childcare or elderly care obligations, including:

  • Providing additional assistance to families with children by temporarily boosting Canada Child Benefit payments.
  • Introducing an Emergency Care Benefit of up to $900 bi-weekly for up to 15 weeks to provide income support to workers who must stay home and do not have access to paid sick leave. This includes:
    • Workers, including the self-employed, who are sick, quarantined, or who have been directed to self-isolate but do not qualify for Employment Insurance (“EI”) sickness benefits.
    • Workers, including the self-employed, who are taking care of a family member who is sick with COVID-19, such as an elderly parent or other dependents who are sick, but do not qualify for EI sickness benefits.
    • EI-eligible and non EI-eligible working parents who must stay home without pay because of children who are sick or who need additional care because of school closures.
  • Providing additional assistance to individuals and families with low and modest incomes with a special top-up payment under the Goods and Services Tax (GST) credit.
  • Waiving, for a minimum of six months, the mandatory one-week waiting period for EI sickness benefits for workers in imposed quarantine or who have been directed to self-isolate.
  • Waive the requirement for a medical certificate to access EI sickness benefits.

For more information on EI and the measures being implemented by the Government of Canada, see COVID-19 Federal Support Update.

2. Can I conduct temporary layoffs?

All employers should first look to their collective agreement (if any) or individual employee agreements for provisions on layoffs.

If there are no contractual terms regarding layoffs, then employers can rely on employment standards legislation to temporarily lay-off employees, as follows:

Please note that public employers (e.g. territorial governments or public agencies) are subject to different legislation.

Northwest Territories

In the Northwest Territories, temporary layoffs are permitted under sections 42 and 43 of the Employment Standards Act. Written notice of the layoff is required, which must include the expected return to work date. There is no requirement that a temporary layoff notice be hand delivered, but employers would want to take proactive steps to confirm that an employee has received the notice.

The maximum length of the layoff period is 45 days within a period of 60 consecutive days. The layoff period may be extended by an Employment Standards Officer, so long as there are special circumstances justifying the extension and the employee will be recalled.

If written notice is not provided to the employee, then the employee will be deemed to have been terminated on the first day of the layoff. Similarly, if an employee is not recalled at the end of the layoff period, then the employee will be deemed to have been terminated at the end of the layoff period.

Once an employee is deemed to be terminated, the employer is liable to pay the employee termination pay, which is calculated by determining the amount of notice of termination the employee would be entitled to. The minimum amount of termination pay is set out under section 39 of the Employment Standards Act. Employees who have worked at least three months are entitled to two weeks of wages and benefits for the first two years of work, plus one additional week of wages and benefits for each additional full year of work, up to a maximum of eight weeks. Employers should note that the Employment Standards Act only sets out the minimum amount of notice, and that employees may be entitled to a longer reasonable notice period under their employment contract or, if there is no contract, under the common law. Employees subject to a collective agreement cannot be terminated without cause, so refer to the specific terms of the agreement.

In addition, it is usually not possible to terminate collective agreements

Employers who wish to terminate the employment of 25 or more employees at one time or within any four week period must give written notice to an Employment Standards Officer within:

  • 4 weeks for less than 50 employees;
  • 8 weeks for more than 49 and less than 100 employees;
  • 12 weeks for more than 99 and less than 300 employees; or
  • 16 weeks for 300 or more employees.

Group terminations cannot take place until the required notice period has expired.

Employers should also be aware of any policies or bylaws that apply to employees regarding layoffs. In particular, municipal employers often have an employment bylaw issued under the Hamlets Act or the Cities, Towns, and Villages Act.

Nunavut

In Nunavut, temporary layoffs are permitted under sections 14.05 and 14.06 of the Labour Standards Act. Written notice of the layoff is required, which must include the expected return to work date. There is no requirement that a temporary layoff notice be hand delivered, but employers would want to take proactive steps to confirm that an employee has received the notice.

The maximum length of the layoff period is 45 days within a period of 60 consecutive days. The layoff period may exceed 45 days if an extension is approved by a Labour Standards Officer and the employer does recall the employee within the layoff period.

If written notice is not provided to the employee, then the employee will be deemed to have been terminated on the first day of the layoff. Similarly, if an employee is not recalled at the end of the layoff period, then the employee will be deemed to have been terminated at the end of the layoff period.

Once an employee is deemed to be terminated, the employer is liable to pay the employee termination pay, which is calculated by determining the amount of notice of termination the employee would be entitled to. The minimum amount of termination pay is set out under section 14.03 of the Labour Standards Act Employees who have worked at least three months are entitled to two weeks of wages and benefits for less than three years of work, plus one additional week of wages and benefits for each additional full year of work, up to a maximum of eight weeks. Employers should note that the Labour Standards Act only sets out the minimum amount of notice, and that employees may be entitled to a longer reasonable notice period under their employment contract or, if there is no contract, under the common law. Employees subject to a collective agreement cannot be terminated without cause, so refer to the specific terms of the agreement.

If an employee who is temporarily laid off does not return to work within seven days of being recalled to work, then the employer is not required to pay the employee termination pay.

Employers who wish to terminate the employment of 25 or more employees at one time or within any four week period must give written notice to a Labour Standards Officer within:

  • 4 weeks for less than 50 employees;
  • 8 weeks for more than 49 and less than 100 employees;
  • 12 weeks for more than 99 and less than 300 employees; or
  • 16 weeks for 300 or more employees.

Group terminations cannot take place until the required notice period has expired.

Employers should also be aware of any policies or bylaws that apply to employees regarding layoffs. In particular, municipal employers often have an employment bylaw issued under the Hamlets Act.

Federal

For employers under federal jurisdiction, temporary layoffs are permitted in certain circumstances that are listed under section 30 of the Canada Labour Standards Regulations. The relevant categories for a layoff resulting from COVID-19 would be:

  • If the term of the layoff is three months or less.
  • If the term of the layoff is more than three months and less than six months, and the employer provides the employee with written notice that they will be recalled on a certain date. The employer must then actually recall the employee within the layoff period.
  • If the term of the layoff is more than three months, and either:
    • the employer pays the employee during the layoff period an amount agreed to by the employee and employer;
    • the employer continues to make payments for the benefit of the employee to a pension plan that is registered pursuant to the Pension Benefits Standards Act or under a group or employee insurance plan;
    • the employee receives supplementary unemployment benefits; or
    • the employee would be entitled to supplementary unemployment benefits but is disqualified from receiving them pursuant to the Employment Insurance Act.
  • If the term of the layoff is more than three months but not more than 12 months, and the employee, throughout the term of the layoff, maintains recall rights pursuant to a collective agreement.

If the layoff does not fall within one of these categories, then the employment of the employee is deemed to have been terminated when the layoff occurs, as per sections 230(3) and 235(2)(a) of the Canada Labour Code.

Terminated employees who have worked longer than three consecutive months are entitled to two weeks of notice or pay in lieu thereof under section 230 of the Canada Labour Code.

In addition, employees who have worked for 12 consecutive months or longer are entitled to severance pay in an amount that is the greater of:

  • five days of wages; or
  • two days of wages for each completed year of continuous employment.

Employers should note that the Canada Labour Code only sets out the minimum amount of termination pay that a terminated employee would be entitled to. Employees may be entitled to more termination pay under their employment contract or, if there is no contract, under the common law. Employees subject to a collective agreement cannot be terminated without cause, so refer to the specific terms of the agreement.

Employers who wish to terminate 50 or more employees at one time or within a period of four weeks must provide notice to the Minister of Labour at least 16 weeks before the date of termination.

3. Can I terminate an employee without notice?

As always, first look to the collective agreement (if any) or individual employment contracts for provisions regarding termination without cause. Typically, collective agreements do not permit employers to terminate employees without notice, unless the position has become redundant. If the employer is not getting rid of the position permanently, then it should consider temporary layoffs first.

Under both the Employment Standards Act (Northwest Territories) and the Labour Standards Act (Nunavut), employers are required to provide their employees with notice of termination. However, termination pay can be provided to the employees in lieu of notice, which means that the termination can take place immediately.

In both jurisdictions, the minimum amount of notice is two weeks for less than three complete years of work, with one additional week of notice for the third complete year and each complete year thereafter, up to eight weeks max.

For federal employers, the Canada Labour Code does not permit employers to terminate non-managers who have been working for 12 consecutive months without cause, unless there is a discontinuance of a function (i.e. a layoff). However, employees who have worked longer than three consecutive months but less than 12 consecutive months can be terminated with two weeks of pay in lieu of notice.

If the employee has worked for 12 consecutive months or longer, and there is a discontinuance of a function, then the employee would be entitled to severance pay in addition to two weeks of pay in lieu of notice. The amount of severance pay is the greater of:

  • five days of wages; or
  • two days of wages for each completed year of continuous employment.

Employers should note that the employment standards legislation only sets out the minimum amount of notice, and that employees may be entitled to a longer reasonable notice period under their employment contract or, if there is no contract, under the common law.

4. When do I have to issue a Record of Employment (“ROE”)?

An ROE needs to be issued each time an employee experiences an interruption in earnings in excess of 7 days, or when Service Canada requests one. However, for part-time, on-call, or casual workers, employers do not have to issue an ROE every time there is an interruption of earnings of 7 days or more. For these employees, employers must issue an ROE when:

  • an employee requests an ROE and an interruption of earnings has occurred;
  • an employee is no longer on the employer's active employment list;
  • Service Canada requests an ROE; or
  • an employee has not done any work or earned any insurable earnings for 30 days.

On March 11, 2020, the Government of Canada announced that they will be waiving the mandatory one-week waiting period for EI sickness benefits for workers in imposed quarantine or who have been directed to self-isolate. This waiver will be in place for a minimum of six months.

For more information on EI and the measures being implemented by the Government of Canada, see COVID-19 Federal Support Update.

5. Can I mandate unpaid leaves of absences or furloughs?

A compulsory leave of absence, without a contractual right to mandate such a leave, may amount to a constructive dismissal. That is especially so when it is unpaid with no guarantee of eventual employment and is of an indefinite duration.

Even where a compulsory leave of absence is paid but at a reduced wage, there is a risk of a constructive dismissal claim. Not only has the employee’s wage been impacted, but so has his/her hours of work, duties, and responsibilities. The legal risk in such a circumstance, without the express agreement of an employee, is quite high, and as such, it is generally prudent to either effect a temporary layoff as contemplated by territorial or federal employment standards legislation, or to terminate the employee on a without cause basis, where that option is available,  with either working notice or pay in lieu of working notice.

6. Can I mandate the use of banked time or vacation leave?

Unless there is a provision to the contrary in a collective agreement or an employment contract, employers are permitted to direct employees to take vacation leave. Most collective agreements set out that vacation leave is a benefit to be taken by agreement between the employee and employer, so employees cannot be forced to take vacation leave.

Although an employer may have the option of forcing an employee to take vacation, it is important to consider the impact this will have on the employee morale. Other options should be considered first, such as a temporary layoff, which may entitle employees to additional benefits from EI.

Employers who choose to require employees to take vacation leave should first explain the business circumstances to the employee, and attempt to obtain agreement from the employee that banked time or vacation leave will be used at a specific time. Failing agreement, the employer could still exercise its management rights and force vacation leave.

7. Can I cancel an employee’s vacation leave to ensure there is enough staff working?

For employees subject to a collective agreement, vacation leave is usually subject to operational requirements. As a result, it is often possible to cancel vacation leave or recall employees who have already left for vacation if the business cannot function without the employee present. Keep in mind that the collective agreement might require the employer to cover the cost of cancelling travel plans to return to work.

If there is no collective agreement, then the employer has the right to cancel vacation leave to maintain operations.

8. My business is experiencing hardship. How can I reduce my wage-related expenses short of terminating or laying off employees?

Any reduction in compensation creates a risk of constructive dismissal claims, particularly if over 10% of an employee’s total compensation package (e.g., wage reduction; elimination of an RRSP matching program; elimination of incentive pay) is reduced. Across the board reductions of 5% to 10% have been allowed by courts in some cases (although disallowed in others). We often recommend trying to reduce wage costs by reducing overtime or eliminating other expenses arising from an employee’s duties (e.g. travel) prior to effecting an across the board compensation decrease.

Generally, a reduction in a bonus and/or benefit, as opposed to base salary, carries a lower risk of constructive dismissal claims, although bonuses would likely be viewed as an integral part of employee compensation.

With any negative change that may constitute constructive dismissal, employers can lower the risk by doing the following:

  • Implementing the change in exchange for something positive for the employee (e.g. making changes at the time of a promotion, a pay increase, or some kind of new benefit).
  • Giving advance notice of the change in an amount similar to reasonable notice of termination. In reality, employers are terminating employment on the existing terms (at some later date) and offering new employment at slightly different terms the very next day. This type of notice needs to be carefully worded.
  • Getting employee buy-in through effective communications.

Even if it is constructive dismissal, employees will be viewed as having acquiesced to the change if they do not object in a timely manner. Thus, sometimes the best strategy is for employers to be transparent in their communications as to why the change is being made and see if employees object (at which time the employer would need to decide how to respond). This is easier in some cases than others, and we recommend seeking legal advice in specific situations.

The test for constructive dismissal places the onus on the employee to demonstrate that a fundamental term and condition of employment was unilaterally changed by the employer. At this time, we do not see this pandemic changing the legal test for constructive dismissal. However, from a risk standpoint, should the economy continue through a recession, we would expect that some employees may be more willing to agree to reductions in their working conditions if the alternative is unemployment. This means that should employers be required to implement unilateral changes, some employees may simply acquiesce to such changes, in ways they otherwise would not have even 2 to 3 months ago.

We will continue to update you on employment issues as they evolve during the COVID-19 pandemic. Please contact us if you have any questions or need assistance.

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