Employer Considerations: Short- and long-term planning in the face of COVID-19

Posted March 18, 2020 Category: Businesses

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Employer Considerations:  Short- and long-term planning in the face of COVID-19

As the global COVID-19 pandemic becomes a provincial emergency, employers are wondering how to proceed with their employees in both the short-term and long-term.

In our view, the best practices for the short-term are to assess the health and safety risk on an ongoing basis having regard to the public health recommendations; allow those employees who can to work at home; for those employees who can’t work at home, put in place strong public safety measures such as regular handwashing and social distancing; and if it becomes necessary for health and safety or other reasons to ask employees to take a leave of absence, ensure that that leave of absence either has an end date or a review date (as there is a possibility that this public health crisis will last for weeks or even months) and allow employees to access their vacation or other accrued credits to maintain their pay for a short period of time.

With respect to the long-term, assuming that the public health crisis becomes prolonged, it may be necessary for both public and private sector employers to reduce their payroll costs significantly in order to remain viable. 

On a technical level, the imposition of an unpaid leave of absence constitutes a constructive dismissal giving rise to a claim for wrongful dismissal damages unless the employment terms allow for such an eventuality, which in our experience is rare.  Our research related to cases decided after the SARS and other outbreaks does not result in any certainty that a court would not find a constructive dismissal in such circumstances.

However, there are principles in the case law which could be argued by an employer if such claims ever came forward, such as the following:

  • any such unpaid leave was made in good faith and for valid business purposes;
  • a reasonable person in the employee’s shoes would, at the time of entering into the employment relationship, have agreed that if an unpaid leave of absence was required to ensure the continued viability of the employer, then it was reasonable for the employer to proceed in that fashion;
  • a term should be implied into the employment relationship that if an unpaid leave of absence was required to ensure the continued viability of the employer, then it was open to the employer to impose such a leave of absence; and
  • if necessary to ensure the “business efficacy” of the employment relationship, it was appropriate for the employer to impose the unpaid leave of absence.

Given that Ontario and the world has never seen a pandemic of this magnitude in modern times, these arguments could be compelling to a judge, especially if the unpaid leave of absence was preceded by other short-term steps taken by the employer such as those mentioned above.

And on a practical level, we think that most employees are more interested in maintaining their employment relationship with their employer (which the unpaid leave of absence would not technically disturb unless it was found to be a constructive dismissal) in the long term, as opposed to engaging in lengthy, risky and expensive litigation with their employer.

Posted March 18, 2020 Category: Businesses

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