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The new Government measures to tackle the COVID-19 pandemic: an FAQ for employers

Employment Bulletin
20.03.20
By Janna Young and James Jeffrey

Since our first update last week, the circumstances surrounding coronavirus disease 2019 (COVID-19) have changed dramatically. The World Health Organization declared the disease a "pandemic". There are over 146 confirmed cases in Alberta, with over 846 Canada-wide. On March 17, 2020, the Alberta Government declared a state of public health emergency.

All levels of government are in the process of implementing significant measures to respond, including changes to Employment Insurance (EI) programs and employment standards legislation.

Alberta employers are justifiably concerned about how to handle this unprecedented situation. This article will describe new government measures and answer a few frequently asked questions.

Various factors, such as the employer's particular industry, workplace policies, and collective agreements or employment contracts, will impact the employer's optimal response. We strongly encourage employers to contact employment law counsel with any questions or concerns – and to do so in a timely manner – rather than take steps on their own if they have any uncertainty. The circumstances surrounding COVID-19 and, in turn, the legal options available to employers, are changing rapidly. The optimal solution today may not be the optimal solution tomorrow.

Federal Government measures

On March 18, 2020, the Federal Government announced $82 billion in COVID-19-related funding. The highlights of the announcement for employers include:

Reducing remittances

Select employers may reduce their remittances for income tax withheld on employees' remuneration for three months.

The subsidy will be equal to 10 per cent of remuneration paid during the three months, up to a maximum of $1,375 per employee and $25,000 per employer.

Eligible employers include those eligible for the small business deduction, non-profit organizations, and charities.

Employment Insurance programs

  • An "Emergency Care Benefit" will provide up to $900 biweekly for up to 15 weeks for workers and self-employed individuals who are:
    • quarantined but do not qualify for EI Sickness Benefits;
    • taking care of a family member who is sick with COVID-19 but do not qualify for EI Sickness Benefits; and
    • parents with children who require care or supervision due to school closures and are unable to earn employment income, irrespective of whether they qualify for any type of EI.
  • The Emergency Care Benefit application will be available in April 2020. Applicants will be required to attest that they meet the eligibility requirements, and will need to re-attest every two weeks to reconfirm their eligibility.
  • Applicants can select one of three channels to apply:
    • online CRA account;
    • online Service Canada account; or
    • toll-free number equipped with automated application process

For information about changes to the EI Work Sharing Program, see the "Can we utilize the EI Work-Sharing Program as an alternative to layoffs?" section below.

Extension for filing taxes

  • The Canada Revenue Agency will allow all employers to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after March 18, 2020 and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act (Canada). No interest or penalties will accumulate on these amounts during this period.

Alberta Government measures

On March 18, 2020, the Alberta Government announced significant supports for workers and employers. Some of the highlights for employers include:

Emergency isolation support

  • A temporary program for workers who must self-isolate because they meet the Government of Alberta’s published criteria for self-isolation, including persons who are the sole caregiver for a dependent who must self-isolate because they meet the public health criteria, and who will not have another source of pay or compensation while they are self-isolated.
  • An eligible worker will receive one lump-sum payment, which is intended to bridge the gap until the worker qualifies for EI benefits. Premier Kenney has said the payment could be up to $572.
  • Program to be accessible via online application through alberta.ca next week.
  • Funds are expected to be deposited in the accounts of eligible recipients beginning next week.

Income Tax deferral

  • The Alberta Government will defer the collection of corporate income tax balances and instalment payments due after March 18, 2020 until August 31, 2020.

Utility payment holiday

  • Residential, farm, and small commercial customers can defer electricity and natural gas bill payments for the next 90 days.

Premier Jason Kenney has said that additional measures will be rolled out this week and next.

Employment Standards (COVID-19 Leave) Regulation, AR 29/2020 [ESCLR]

On March 13, 2020, the Alberta Government announced that it intended to introduce changes to the Alberta Employment Standards Code that would allow employees who are required to self-isolate or who are caring for a loved one with COVID-19 to take 14 days of paid job-protected leave to cover the recommended self-isolation period. There was considerable confusion about who would be doing the paying.

In Question Period on March 16, 2020, Premier Jason Kenney clarified that the 14-day leave would be unpaid. This was confirmed on March 17, 2020 by Order in Council 64/2020, which created the Employment Standards (COVID-19 Leave) Regulation, AR 29/2020 (the ESCLR).

The highlights of the ESCLR are as follows:

The ESCLR is retroactive to March 5, 2020.

  • Employees are entitled to a 14-day unpaid leave if under quarantine. "Quarantine" includes any self‑isolation and self‑quarantine as a result of COVID‑19, as may be recommended or directed by Alberta's Chief Medical Officer.
    • Example 1: An employee recently returned to Canada from another country. The Chief Medical Officer has recommended that anyone returning from another country should self-isolate for 14 days. Therefore, the employee is entitled to a 14-day unpaid leave.
    • Example 2: An employee is ill with influenza-like symptoms. The Chief Medical Officer has recommended that anyone who is ill with influenza-like symptoms should self-isolate for 14 days (from the date of their illness). Therefore, the employee is entitled to a 14-day unpaid leave.
  • The quarantined employee is not required to have been working for 90 days for the same employer, nor is the employee required to provide a doctor's note.
  • The quarantined employee is not required to give any notice to the employer of the date he or she intends to return to work.
  • The Minister of Labour and Immigration has the power to extend the 14-day leave if the Chief Medical Officer recommends that it is necessary to:
    • suppress COVID-19 in those who may already have been infected with it,
    • protect those who have not already been exposed to COVID-19, or
    • break the chain of transmission and prevent spread of COVID-19.

The ESCLR only applies to provincially regulated workplaces in Alberta.

Frequently Asked Questions

How should we respond to an employee who may have contracted COVID-19?

Employers in Alberta have a legal obligation to ensure the health and safety of their workers and visitors in the workplace. This means an employee with COVID-19 should not be permitted to attend the workplace.

If the employee is unable to perform his or her work duties – either from home or at all – then he or she may be entitled to short-term disability or other benefits. Employers should review their benefits plans with their benefits providers regularly.

An employee who has contracted COVID-19, or who an employer suspects may have contracted COVID-19, may be deemed to have a disability entitling him or her to workplace accommodation. The Alberta Human Rights Commission has provided:

Negative treatment of employees who have, or are perceived to have, COVID-19, which is unrelated to legitimate reasons of public health and safety, is likely to be found to be discriminatory and prohibited under the [Alberta Human Rights Act]. Employers have a duty to accommodate employees in relation to COVID-19, unless it would amount to undue hardship.

An employer should not send an individual employee home or ask them not to work because of concerns over COVID-19 unless the concerns are reasonable and consistent with the most recent advice from medical and public health officials. In unique circumstances, an employer might have other health and safety concerns that could amount to undue hardship, but they would need to be able to show objective evidence to support such a claim.

Employer absenteeism policies must not negatively affect employees who cannot work in connection with COVID-19. An employer may not discipline or terminate an employee who is unable to come to work because medical or health officials have quarantined them or have advised them to self-isolate and stay home in connection with COVID-19.

Employers should carefully assess each situation to ensure they are fulfilling their duty to accommodate.

How do we respond to employees that request time off to care for or supervise their children?

On March 15, 2020, the Alberta Government announced that all schools and daycares would be shut down in an effort to contain the transmission and spread of COVID-19. As a result, a number of employees now have added family care obligations at home that may require additional time off of work.

In Alberta, employees with at least 90 days' service are entitled to take five days of unpaid personal and family responsibility leave per calendar year. Employees who are required to take time off of work to care for family members are also protected from discrimination and entitled to accommodation based on family status. Employers have the obligation to accommodate employees who have care-giving responsibilities to the point of undue hardship, which may include providing extended leaves of absence or working-from-home arrangements.

The Alberta Human Rights Commission has provided:

An employee who has caregiving responsibilities should be accommodated to the point of undue hardship. Such an arrangement might be a leave or an arrangement to work at home. These caregiving responsibilities, which relate to the Act’s protected ground of family status, could include situations where another family member is ill or in self-isolation, or where their child’s school is closed due to COVID-19.

Employers should carefully assess each situation to ensure they are fulfilling their duty to accommodate.

Do we have to notify the Workers' Compensation Board if one of our employees contracts COVID-19?

Most instances of COVID-19 are not "work-related" and do not need to be reported to the Alberta Workers' Compensation Board (the Board), but there are some exceptions.

When a worker contracts COVID-19 as a direct result of their employment and misses work as a result, he or she is entitled to compensation if the following conditions are met:

  • the nature of employment involves sufficient exposure to the source of infection; and
  • the nature of employment is shown to be the cause of the condition or shown to create a greater risk of exposure for the worker.

According to the Board:

  • one "work-related" example is where an acute-care hospital worker, who treats patients with COVID-19, contracts the disease;
  • for the employer's reporting obligation to arise, the inherent nature of the worker's job must have put them at greater risk than the general public of contracting the virus while at work;
  • employers do not have to report cases where one staff member caught COVID-19 from a co-worker; and
  • employers do not have to notify the Board when, due to their staff being at greater risk than the general public of exposure at work, they send one or more workers home because there is a high risk of exposure (if there is no illness, there is no duty to report).

Can we temporarily lay off our employees?

The law on layoffs is complex. We recommend consulting with legal counsel before implementing layoffs.

The first thing to note is that employees generally derive their rights from two places: the common law and statutory law. The common law is "judge-made" law. It is the law made by our courts through "precedents", and is equally binding and often more generous to employees than statutory law. Statutory law or "legislation" is the law made by legislatures. Compliance with statutory law does not guarantee compliance with the common law.

Two examples of statutory law are the Alberta Employment Standards Code, RSA 2000, c E-9 (Alberta Code), which applies to provincially regulated employers in Alberta, and the Canada Labour Code, RSC, 1985, c L-2 (Canada Code), which applies to federally regulated employers.

The Alberta Code

The Alberta Code sets out the minimum requirements that provincially regulated employers must comply with for their layoffs to be lawful. The Alberta Code sets a maximum layoff duration of 60 days within a 120-day period. For the layoff to be lawful, an employer must provide written notice of the temporary layoff, and the notice must:

  • state that the layoff is temporary;
  • state the date that the layoff is to commence; and
  • include a copy of sections 62 to 64 of the Alberta Code.

The Alberta Code also provides that the layoff notice must be given to the employee:

  • at least one week prior to the date that the layoff is to commence, if the employee has been employed for less than two years;
  • at least two weeks prior to the date the layoff is to commence, if the employee has been employed for two years or more; or
  • if unforeseeable circumstances prevent an employer from providing the above notice, as soon as is practicable in the circumstances.

If an employee is not recalled to work before the 61st day of the layoff, the Alberta Code considers the employee's employment as ended, which triggers termination pay (and other) obligations.

Employers can extend temporary layoffs beyond the 60 days without breaching the Alberta Code if the employer makes regular payment to or on behalf of the employees, including continuing to pay wages and contributing to employee pensions or benefits and the employee agrees to these payments in lieu of a firm limit on the length of the layoff.

The Canada Code

Under the Canada Code, a layoff is deemed to be a termination of employment (triggering an employee’s right to make an "unjust dismissal" claim) unless the regulations under the Canada Code make an exception.

Under section 30(1) of the Canada Labour Standards Regulations, CRC, c 986 (Canada Code Regulations), a layoff is deemed not to be a termination of employment where:

  • the layoff is a result of a strike or lockout;
  • the term of the layoff is 12 months or less and the lay-off is mandatory pursuant to a minimum work guarantee in a collective agreement;
  • the term of the layoff is three months or less;
  • the term of the layoff is more than three months and the employer
    • notifies the employee in writing at or before the time of the layoff that he will be recalled to work on a fixed date or within a fixed period neither of which shall be more than six months from the date of the layoff, and
    • recalls the employee to his employment in accordance with subparagraph (i);
  • the term of the layoff is more than three months and
    • the employee continues during the term of the layoff to receive payments from his employer in an amount agreed on by the employee and his 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; or
  • 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.

The Common Law

The common law does not recognize the concept of an economic layoff in its own right; instead, our courts apply general principles of contract law to determine whether a layoff is lawful, often with unpredictable results. Although there is some uncertainty, particularly in Alberta, the state of the common law can likely be summarized as follows:

In the absence of an express or implied contractual right to temporary layoff, a temporary layoff is a constructive dismissal. The temporary layoff is a unilateral and fundamental change in the employment contract in that the employee is no longer performing the contractual duties associated with his or her position and may not be receiving his or her contractual salary.

An example of an "express contractual right" to temporarily lay off an employee would be a term in the employee's written employment contract in which the employer clearly and unambiguously reserved the right to layoff the employee in compliance with the relevant employment standards legislation.

Even in the absence of an express term, courts sometimes imply a term into a contract. A term allowing the employer to lay off the employee may be implied in situations where, for example, a past practice has been established. For example, in one case a right to layoff at the end of each season was implied into the contract of an equipment contractor on the basis of a past practice whereby he was regularly laid off each winter and recalled the next spring over a period of several years.

In the absence of an express or implied term, then, laying off an employee for an extended period of time could amount to a constructive dismissal. This has potentially serious consequences. For example, if an employer laid off one of its employees, and there was no express or implied term in the employment contract allowing it to do that, the employee could turn around and sue the employer in a civil court for wrongful dismissal (i.e. for failing to provide reasonable notice of termination).

Are laid-off employees still entitled to or covered by their benefits plans?

The specific language of the benefits plan will dictate whether (i) the employer is required to contribute during the layoff and (ii) whether the employee will continue to receive or qualify for benefits during the layoff. Before making any layoff decisions, employers should review their policies and speak with their benefits plan provider.

Can we utilize the EI Work-Sharing Program as an alternative to layoffs?

Work-Sharing (WS) is an Employment Insurance program designed to help employers and employees avoid layoffs when there is a temporary reduction in the normal level of business activity that is beyond the employer's control. The idea is that a unit of employees agrees to reduce their hours to avoid a layoff, with the resulting reduction in pay covered, in part, by Employment Insurance.

Under a WS agreement, eligible employees receive 55 per cent of their wages for hours lost, up to a maximum amount. For example, an eligible employee earning $625 per week and working 20 per cent fewer hours should receive $68.75 per week in EI benefits under a WS agreement: ($625 x 55%) x 20% = $68.75.

The Federal Government announced that, following the COVID-19 pandemic, it would be allocating an additional $12 million toward the program and streamlining the application process. It has also introduced temporary measures, effective March 15, 2020 to March 14, 2021, that extend the length of time WS agreements can last to 76 weeks.

Employers are eligible for the WS temporary special measures if they have experienced a downturn in business activity related to the COVID-19 pandemic, and have:

  • WS agreements signed between March 15, 2020 and March 14, 2021;
  • WS agreements that began or ended between March 15, 2020 and March 14, 2021; and
  • WS agreements that ended between June 23, 2019 and March 14, 2020, and are in their mandatory cooling-off period.

Employers

To be eligible for a WS agreement, the business must:

  • be experiencing a recent decline in business activity of at least 10%
  • be experiencing a recent decline in business activity directly or indirectly related to the impact of COVID-19, the downturn in the forestry and steel and aluminum sectors demonstrate that the shortage of work is temporary, beyond your control and not a cyclical/recurring slowdown
  • demonstrate that the shortage of work is temporary, beyond your control and not a cyclical/recurring slowdown
  • be a year-round business in Canada for at least two years
  • be a private business, a publicly held
  • company or a not-for-profit organization
  • have at least two employees in the WS unit
  • be willing to implement a recovery plan to support the on-going operations and viability of the business

Employees

To be eligible for WS, employees must:

  • be year-round, permanent, full-time or part-time employees needed to carry out the day-to-day functions of the business (your "core staff")
  • be eligible to receive EI benefits
  • agree to reduce their normal working hours by the same percentage and to share the available work

The WS application must be submitted a minimum of 30 days prior to the requested start date, so employers should initiate the process now if they foresee WS as a viable option. It is unclear if, and to what extent, the 30-day minimum will be relaxed. The application must include at least the following documents:

Throughout the duration of the WS Program, employers are required to provide periodic reports and information to Service Canada.

There are a number of online resources available to employers relating to the WS Program, including an Applicant Guide. Employers can call 1-800-367-5693 or 1-855-881-9874 to speak with a representative of Employment and Social Development Canada.

If we lay off employees can we top-up their EI benefits?

Employers can use a "Supplemental Unemployment Benefit" (SUB) Plan to increase their employees’ weekly earnings when they are unemployed due to a temporary stoppage of work, training, illness, injury, or quarantine. Any top-ups to an employee's EI benefits, when that employee is not working for the aforementioned reasons, result in a "claw back" of their EI benefits unless the top-ups were paid pursuant to a SUB Plan registered with Service Canada.

SUB Plans are registered with the "Service Canada Supplemental Unemployment Benefit Program". More information is available online:

Given the uncertain economic situation, can we unilaterally implement pay cuts or reduce hours?

Unilaterally reducing an employee's remuneration or hours may constitute "constructive dismissal". A constructive dismissal occurs when an employer demonstrates an intention to no longer be bound by the employment contract. When this occurs, the employee can either accept the change or treat the change as a “repudiation” of the employment contract and sue for wrongful dismissal.

Determining whether an employee has been constructively dismissed is a fact-driven exercise. Whether a pay cut or reduction in hours constitutes constructive dismissal will depend on the particular circumstances, including the history of the employment relationship and the terms of the relevant employment contract.

Article references can be found in the attached PDF.