COVID-19 Update – Things to Think About When Contemplating Workforce Adjustments or Reductions

COVID-19 and the resulting social distancing, self-isolation and quarantine directives have forced businesses to make hard decisions in the interest of immediate business continuity and, ultimately, long-term business survival.

While not what most employers want to be dealing with this week, it is inevitable that many are looking at workforce adjustments (such as hours reductions, shift-size reduction, reallocation of job duties, etc.) or even workforce reductions, particularly where the business is facing a slowdown or temporary closure situation (whether voluntary or directed by public health or government). When dealing with these hard decisions, employers must not lose sight of their legal obligations. In an effort to assist you in making informed decisions, we have summarized some key considerations concerning workforce adjustments and/or reductions in the current climate.

What Should Employers Consider When Planning Workforce Adjustments?

  • Certain Canadian jurisdictions have statutory hours of work requirements that, among other things, require employers to provide advance notice to employees concerning work schedule or hours-related changes. These statutory requirements exist regardless of whether employers are considering reducing or increasing work hours. For example, in Quebec, an employee has the right to refuse to work if employer does provide at least five days notice to the employee concerning a schedule change.
  • In some jurisdictions, there are exceptions to the requirement for notice re: schedule changes where the variation to the employee’s schedule is due to unexpected, unusual, or emergency circumstances.
  • Employers should also consider whether a change in hours or scheduling could impact employees from a human rights perspective, including most importantly the duty to accommodate on the basis of family status to the point of undue hardship, when changing an employee’s hours of work. This will likely be an increased challenge in jurisdictions where we have seen school and daycare closures, resulting in heightened childcare needs for many employees.
  • Finally, employers should consider any relevant past practices, policies procedures, and – if applicable – collective agreements when making adjustments to a work schedule.

Can Employers Unilaterally Reduce Employees’ Hours of Work?

  • For employees whose hours fluctuate and are not guaranteed (e.g. casual or part-time employees), a unilateral reduction in hours may not be considered a layoff or constructive dismissal, unless an employee’s hours are reduced to zero (i.e. the employee is actually laid off). This will also depend on the employer’s scheduling practices and consistency of past hours of work. 
  • For employees with regular or fixed hours, a significant unilateral reduction of regular work hours may be considered a layoff and/or may expose an employer to constructive dismissal claims or, in the unionized environment, grievances if the collective agreement doesn’t permit the reduction. If an employer is able to demonstrate that an employee or the union has accepted the modification schedules, this risk may be mitigated. 
  • Employers should also be aware of their potential statutory obligations to provide minimum pay when employees are sent home prior to completing their scheduled work hours. In many Canadian jurisdictions, this obligation arises where an employee was scheduled to work more than three hours, arrives at work, and is sent home prior to starting their shift or completing three hours of work. 

What about the Option of Temporary Layoff?

  • In responding to changing business needs and the economic climate, employers may prefer to place employees on a temporary layoff rather than reduce hours or work. For more information on temporary layoffs please check out our recent update here.

Can Employees Agree to Work Overtime in Excess of the Statutory Maximum Allowable Hours Per Day/Week?

  • In the event that a large number of employees refuse to attend work or become available due to illness, self-isolation or quarantine, an employer may want to look to its available employees to work overtime hours. In some Canadian jurisdictions, an employer and an employee can agree that the employee will work more than the daily and/or weekly statutory limits on hours of work. Regardless of such agreement, eligible employees are entitled to receive overtime pay for any overtime worked.
  • Employers should be mindful of the statutory requirements in their jurisdictions with respect to maximum hours of work, required break periods, overtime and agreements to exceed these requirements, so that they aren’t inadvertently tripping over statutory requirements. Unionized employers should also review their collective agreements and, where appropriate, work with their unions to address any staffing or operational shortfalls.

Absent an Agreement, Can An Employer Force Excess Hours and/or Overtime Hours?

  • Generally, it is not permissible to require an employee to work more than the applicable statutory maximum hours per week or unilaterally schedule overtime hours. Among other things, this can create the risk of constructive dismissal or employment standards claims and in a unionized environments, may give rise to grievances if it contravenes a collective agreement. An employer should assess the nature of their business, workforce and applicable employment standards legislation/collective agreement before proceeding.
  • In some Canadian jurisdictions, under specified exceptional circumstances, it is permissible for an employer to require an employee to work more than the statutory maximum number of hours per week. An employer must ensure that it continues to be in compliance with applicable statutory rest periods, eating periods, and hours of work requirements (including excess hour requirements) in these circumstances. For example, in some provinces, exceptions to the statutory maximum hours per week can apply to deal with an emergency, provide essential services, ensure continuous process or operations are not interrupted, or to carry out urgent work.

Can Employers Require Employees To Take Vacation to Address Operational Challenges?

  • Employers are generally entitled to schedule employees’ statutory vacation time entitlements, subject to the applicable employment standards legislation requirements and the employer’s relevant workplace policies. That said, employers should ensure that unilateral scheduling of vacation time does not conflict with any requirements under an employee’s employment agreement or an applicable collective agreement.
  • A number of provinces require an employer to provide employees with written notice before requiring that they take their vacation. Also, many Canadian jurisdictions require that, at a minimum, vacation time be taken in unbroken periods of at least one week, unless the employee requests otherwise.
  • Employers can also offer employees the option to use their vacation entitlements in the event they are self-isolating, in order to receive compensation they would not have otherwise received. This should be voluntary, rather than required by employers.

What Happens if an Employer Needs to Reduce the Workforce?

  • In a worst-case scenario, if a workforce adjustment or temporary layoff doesn’t solve the operational problem or financial impact of COVID-19, employers may be forced to look at permanent workforce reductions.
  • It is important that employers recognize that terminations in these circumstances will be considered “without cause” terminations and as such, the applicable statutory, common law and, in Quebec, Civil Code requirements will apply. There is no exception as a result of COVID-19 that would reduce these requirements. In fact, in respect of the common law, there may be an increased risk of demands seeking longer notice periods as a result of the market and economic uncertainty arising from the COVID-19 crisis. 
  • Employers should review their employment agreements in order to assess severance liability before proceeding.

The circumstances and potential consequences for employers in connection with COVID-19 continue to evolve each day. When making decisions to protect your people and your business, we strongly recommend seeking advice of counsel. Accordingly, our National Labour & Employment Group is available to assist clients on a 24/7 basis. If you need assistance, please reach out to any member of our team whenever you need to.

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