With over 78% of adults in Ontario having received at least their first dose of a COVID-19 vaccine, there is much talk about the economy starting to rebound and employees returning to in-person work. Just recently, CBC News and Global News reported that hiring intentions have hit an all-time high as pandemic restrictions start to ease. A quiet, collective sigh of relief is starting to be heard across the province.
Despite this collective optimism, the unfortunate reality is that many employers will not be able to redeploy all employees who have been placed on infectious disease emergency leave (“IDEL”) to their pre-pandemic positions/jobs. BBC News recently reported on this stark reality.
Employers are starting to ask, what happens when the job-protected IDEL ends? If the employee’s pre-pandemic position no longer exists, can they be forced to accept a different position? What if the new position is in a different city or province? Can the employee’s pay/vacation entitlements/hours/etc. be reduced? What happens if we eliminate or drastically reduce an employee’s annual bonus or commissions? If we have to terminate, does the employee’s time off on IDEL count towards their years of employment for the purposes of calculating termination/severance pay and common law reasonable notice?
Making changes to an employee’s work arrangements, remuneration or benefits
For various reasons an employee’s pre-pandemic position may no longer exist, but there may be space in a different position or department. Or, the position is still needed, but the employer cannot afford to pay everyone what they were paid before or provide the same amount of vacation, bonuses, commissions, benefits, etc.
As a general rule, employers are allowed to restructure their workforce and make changes to how they run their business in order to meet the needs of their business. That is the general rule, but there is a limit to the changes an employer can make without risking a claim of constructive dismissal.
Constructive dismissal occurs where the employer makes a unilateral substantial change to a term or condition of employment that amounts to a fundamental breach of the employment contract where the employee does not agree to the change. The result is that the employee can treat their employment contract as having been wrongfully terminated and leave the employment relationship. At that point, the employer will be liable for termination pay under the Employment Standards Act, 2000 (the “ESA”) and possibly severance pay and common law reasonable notice.
What amounts to a “fundamental breach” of the employment contract is case-specific and depends on the particular circumstances; there is no hard-and-fast rule for when constructive dismissal has occurred. That said, there are situations where constructive dismissal is more likely. For example, a substantial demotion in rank and/or reduction in salary is likely to be found to be constructive dismissal (e.g. a senior executive who pre-pandemic made an annual salary of $200,000, but following the pandemic is demoted to the position of department manager with an annual salary of $100,000).
Employers sometimes argue that: they didn’t want to make the change but had no choice; they were trying to save jobs or keep the company from bankruptcy; and, therefore, should not incur liability for constructive dismissal. Unfortunately, good faith reasons or motivation behind an employer’s decision to make changes to the employment relationship is largely irrelevant to the courts. However, if the change was made in bad faith, an employer can be sanctioned by the courts and face additional damages.
Employer obligations for terminations after IDEL ends
Where restructuring is not possible and the employee’s employment is terminated without cause, or where constructive dismissal has occurred, the employer will have to provide the employee with either working notice or pay in lieu of notice, severance pay in certain circumstance and continued group benefit plan contributions as required by the ESA. The employer may also be required to pay the employee common law reasonable notice depending on whether there is an enforceable employment contract limiting the employee’s entitlements.
In calculating the years of employment, the period of time the employee was off on IDEL must be included when calculating termination and/or severance pay under the ESA or reasonable notice under the common law.
If you are an employer and have any questions or require any assistance with any termination or employment issues, please feel free to reach out to any of the lawyers in Siskinds’ Labour & Employment Group.