I began a discussion, last week, about how the clock has started ticking in relation to laid-off employees and the status of their employment relationships. The point of that bulletin was to instigate planning for what employers will do when COVID-related restrictions ease and businesses start gearing up.
In particular, I wanted to get employers thinking about what they are facing if…
To date in our new post-social existence, businesses really haven’t had to think that far ahead, largely because in the rush to curtail operations in support of social-distancing initiatives, there simply wasn’t time. Few people were planning the mechanics of what will happen 2 or 3 (or 6) months down the road when it’s time to scale up once again.
The time to be engaging in that planning is right now because it could be upon us before we know it. If there’s anything that the COVID pandemic has taught us, it’s that advance planning pays off (also the benefits of thorough hand-washing…).
In last week’s bulletin, I looked at this issue through the lens of the B.C. Employment Standards Act. Today, I’m examining the impact of the common law of employment/wrongful dismissal.
The Common Law of Employment/Wrongful Dismissal
To a large degree, the operation of the common law of employment/wrongful dismissal isn’t all that much different than the related provisions of Part 8 of the B.C. Employment Standards Act. But, the common law is administered by the civil courts (the Provincial Court and Supreme Court and Court of Appeal).
When an employer wishes to terminate an employment relationship on a without-cause basis, it must either provide the affected employee with working notice or pay in lieu thereof. In rare instances in which there is just cause for summary dismissal, no notice (or pay in lieu) is required. Also, in cases in which an unforeseen, uncontrollable external force renders the ongoing employment relationship impossible (or “frustrated”) no notice (or pay in lieu) is required.
The requisite amount of notice may be defined in an employment agreement or it may be implied pursuant to the common law. Under the common law of employment/wrongful dismissal, the implied amount of “reasonable working notice” (or pay in lieu) ranges from 0 to 24 months.
There are many other branches to the common law of employment, but those are the key concepts for the purpose of this discussion.
Planning For “Beyond COVID”
If, some number of weeks from now, your business begins to gear up again it is very likely that it will recall only some employees to their regular work schedule.
Whether your business resumes or not, the relationships with some people who are presently employed by you are going to cease (either by operation of the expiry of the 13 week “Temporary Layoff” provision in the Act, or by way of your business expressly notifying employees of the cessation of the relationship, or by employees walking away and claiming a constructive dismissal has occurred). It is almost inescapable that some people are going to be leaving, permanently.
How will the common law courts treat these employment cessations? Will they see the usual legal principles as being unaffected by the COVID pandemic (such that pay in lieu of working notice will be required)? Or will they – in this unprecedented situation - accept the broad applicability of the “frustration” doctrine and excuse employers from paying in lieu of notice?
The answer will have a huge effect on the ability of businesses to resume operations and recover from the impact of COVID and it will have an equally huge impact on the financial stability of many, many employees. Unfortunately, the courts won’t provide the answer until the initial claims have worked their way through the litigation process – perhaps 18-24 months from now.
An Approach The Courts May Adopt
In my own view, the way the civil courts will react to what may be a deluge of civil claims for wrongful dismissal damages will turn on one question…
Can the employer demonstrate that, as a direct and unavoidable impact of the COVID pandemic, the employment relationship could not be continued?
Some cases will be comparatively easy; there will be a plainly identifiable, straight line connecting the pandemic to the termination. Think, for instance, about businesses which shut down completely in March of 2020 and never re-opened. That direct line should be fairly simple to draw.
But, there will also be those terminations falling within a grey zone, ones which are perhaps far more discretionary in nature or in which an employer simply selected one employee to keep over another. Think, for instance, about a full-service restaurant which shut down and then chose to resume in “Drive Thru Only” mode. Or the many businesses which will return intact but on a reduced scale. In both instances, a substantial portion of the staff may become redundant but the employer will have exercised some choice as to who returns to work and who doesn’t.
It is worth remembering at this point that in non-union workplaces, there is no such thing as “seniority” in any legal sense. Employers are not obligated to recall employees in order of seniority; they can recall whomever they choose. Therefore, in workplaces in which some - but not all - employees are recalled, the employer will be exercising its discretion in selecting who returns.
Will those “grey zone” instances qualify for the “frustration” doctrine such that pay in lieu of notice will not have to be paid? I suspect not. I don’t imagine the courts will simply give all employers a “get out of jail free” card, effectively leaving all terminated employees as a group with no remedy.
As I indicated last week, this means we should be talking, right now, about your business plans for the coming months. Will you…
These are the questions we need to work on answering, starting right now. As I mentioned, if there is anything we’ve learned from the COVID pandemic, it’s that planning pays dividends (oh yes, and also that hand-washing thing).
This item is provided for general information purposes only and is not intended to be relied upon as legal advice. Informed legal advice should always be obtained about your specific circumstances.