If facing a sudden drop in revenue or business caused by COVID-19, an employer has several options for managing its workforce. Below, I set out four options and the financial assistance available from the Government of Canada in respect of each option.
Option One: Dismissal – Permanent Termination of Employment
Results in:
- Immediate reduction of workforce
- Potentially, no financial liability*
*The Employment Standards Branch has recently advised that, in some circumstances, a COVID-19-related dismissal may not entitle an employee to notice of dismissal under the Employment Standards Act. The Branch, however, has said that such decisions will be made on a case-by-case basis as complaints are made.
Negative consequences:
- Loss of potentially valuable employees
- If no frustration, liability for damages for wrongful dismissal
Available Financial Resources For employees:
- EI benefits
- CERB (see Resources)
- B.C. Emergency Benefit for Workers (see Resources)
- Ability to work some hours if on EI benefits (see Resources)
Available Financial Resources For employers:
For payment in lieu of notice under the Employment Standards Act:
- 10% Temporary Wage Subsidy for Employers (see Resources)
- Canada Emergency Wage Subsidy (see Resources)
Wage subsidies are not available for retiring allowances for severance.
Option Two: Temporary Layoff (up to 13 weeks)
Characteristics:
Temporary layoffs are permitted if:
- the contract of employment expressly provides for a temporary layoff
- a temporary layoff is a well-known industry-wide practice
- the employee agrees to the layoff
A layoff occurs when an employee earns less than 50% of the employee’s weekly wages, at the regular wage, averaged over the previous 8 weeks.
If permitted, results in:
- a temporary layoff of up to 13 weeks in any in any period of 20 consecutive weeks
- employee remains an employee
Consequences:
If permitted:
- could provide an employer with some breathing room while the employer assesses the impact of the pandemic on the business
If not permitted:
- operates as a termination of employment
Available Financial Resources For employees:
- EI benefits
- CERB
- B.C. Emergency Benefit for Workers
- Ability to work some hours if on EI benefits
- SUB, if employer wants to provide it (see Resources)
Option Three: Reduce hours – Work-Sharing Agreement
Characteristics:
- available for employers for up to 76 weeks
- available to for-profit and not-for-profit employers who are experiencing a shortage of work
- agreement between employers, employees and Service Canada
- available work is redistributed through a voluntary reduction in hours worked by all employees within one or more work units
- employee’s work reduction must be between 10% and 60%
Consequences:
- enables the employer to retain a full work force on a reduced work week rather than laying off part of the work force
- employees are entitled to receive EI benefits for the days upon which they do not work
How to apply:
EMP5100 – Applications for a Work-Sharing Agreement
EMP5101 – Attachment A: Work-Sharing Unit Attachment
Available Financial Resources For employees:
- EI benefits for the days not working
Available Financial Resources For employers:
- 10% Temporary Wage Subsidy for Employers
- Canada Emergency Wage Subsidy
Option Four: Maintain Employment
- Continue to pay employees
Available Financial Resources For employers:
- 10% Temporary Wage Subsidy for Employers
- Canada Emergency Wage Subsidy