As Canada’s provinces reopen in stages, many unemployed and under-employed Canadians are still relying on the Canada Emergency Response Benefit (CERB) and some are getting ready to apply for it before it expires on October 3, 2020.
What CERB Means For Severance Entitlements
Even with a severance package, Canadians are eligible for CERB and can apply up to December 2, 2020, but right now, both employees and their employers may be wondering if severance must be paid, particularly if the pandemic played a role in the layoff.
Yet, getting an accurate, definitive answer can be difficult because, although the Canada Labour Code does have federal labour standards, employment laws also vary from province to province. Notably, while laws specifically address severance (and in some provinces, severance during the pandemic,) it seems the language of the law is open to interpretation. Not surprisingly, employers, employees and their respective lawyers may decide to understand their provincial governments’ requirements very differently.
Consult Before Acting
To further compound the challenges, certain provinces have changed their regulations in response to the pandemic so employers and employees likely need to check with internal and external experts as well as government officials before taking action.
Generally speaking, employees are entitled to severance if fired without cause or laid off for more than a certain time period, for example, 13 weeks. In addition, some provinces, such as B.C., have extended the period, for example to 16 and then 24 weeks.
In British Columbia
In B.C., it seems that some businesses are dismissing workers and may be intentionally using the pandemic to avoid severance payments. They maintain the Employment Standards Act says severance pay isn’t necessary if people have lost their jobs “due to an unforeseeable event or circumstance” and goes on to say, “[a]n example of such a change would be the destruction of a worksite by fire or flood.” As a result of the pandemic, B.C. also added this phrase: “If a business closure or staffing reduction is directly related to COVID-19 and there is no way for employees to perform work in a different way (for example, working from home), the exception may apply to exclude employees from receiving compensation for length of service and/or group termination pay.”
Yet in response to a B.C. employer who refused to pay severance or termination pay “due to unforeseen circumstances beyond our control”, B.C. Labour Minister Harry Bains provided this statement, written by a communications staffer, when The Tyee reporter Andrew MacLeod requested an interview:
“Government has been clear that we expect all businesses to respect workers’ rights and the benefits they’ve earned. I can’t comment on a specific case before the Employment Standards Branch but businesses should be aware that they could be ordered to pay penalties on top of compensation for length of service if they are found to have illegally denied benefits.”
Statement from British Columbia Labour Minister Harry Bains
Such obviously conflicting statements are simply compounding the confusion and increasing the odds that the various parties will end up in court which is costly, time-consuming and often, incredibly stressful.
Work Reduction Under An Emergency Order
How This Is Playing Out in Ontario
In May 2020, the Ontario government amended the Ontario Employment Standards Act by introducing Regulation 228/20 which let employers cut hours and wages until six weeks after the emergency order was lifted in this province without triggering a constructive dismissal claim for severance. The declared State of Emergency will end in Ontario on September 22, 2020, which means Ontario employees may need legal help in order to argue for severance pay from their employers before the first week of November. Before this change, employers couldn’t cut pay or hours without triggering a constructive dismissal claim for severance pay.
Atlantic Canada
In Newfoundland and Labrador, employers that don’t recall employees before the statutory deadline, will have to pay severance. However, in all of the Atlantic provinces, including Labrador and Newfoundland, severance probably doesn’t have to be paid if the terminations were the result of economic or climatic conditions beyond the employers’ control.
Once again, it’s open to interpretation and may result in out-of-court settlements or prolonged legal battles.
Finding Answers
Most employees and employers will likely go online for information on severance and they’ll find news articles and opinion pieces from respected news sources as well as statements from government authorities. Of course, they’ll also come across dozens of blog posts, typically the work of lawyers and their law firms, that were created as much to solicit new business as to educate and inform.
Real Time Information
While most sources and experts are doing their best to share accurate, relevant information, it’s well worth double-checking the “facts” that will affect your business and livelihood with credible, authoritative sources at the time of action. Ultimately, accurate information may only be available on a "real time" basis, and—as policy makers and the legal community navigate the relationship between CERB & severance—the answers may change.
Reputation As Your Litmus Test
In a scenario like this where our immediate questions may only have answers in the future, we may need to make our decisions in a different way. As an employer, your reputation and public image are as much at stake as your economic sustainability, while employees must weigh the potential payoff against the legal costs and emotional toll of pursuing a severance claim.
At this time, PaymentEvolution can offer two recommendations.
Consult the Experts
First, always consult the experts and do so at the moment of decision-making. The PayEvo Human Experience (HX) team is here for you. Every situation will be different and, without clear standards and legal direction, your business shouldn't navigate this issue alone. Small and mid-sized businesses that may not have HR staff, still need to do this right. HX has experts on hand to support you and can connect you to legal experts if and when you need more information.Do What Feels Right, Ethical & Fair
Secondly, consider your instincts alongside expert advice and timely information. We may not have answers for a while, but being able to stand by your decisions can bring you peace of mind. Even if future clarity means you need to revise your past decisions, doing what feels right (and in alignment with the spirit of Canadian labour laws) is your best chance to get this right.
HX Experts at PayEvo - HR On Demand
You don't have to go it alone. Working with an expert in human resources or employment law is as easy as emailing our Human Experience Team or fill in the form below and we’ll be in touch!
Resources:
stewartmckelvey.com/thought-leadership/covid-19-faq-checklist thetyee.ca/Analysis/2020/07/06/BC-Hurting-Workers-Dodging-Pandemic-Severance-Pay globalnews.ca/news/7019830/ontario-layoff-regulations-limbo
alberta.ca/temporary-layoffs
As Canada’s provinces reopen in stages, many unemployed and under-employed Canadians are still relying on the Canada Emergency Response Benefit (CERB) and some are getting ready to apply for it before it expires on October 3, 2020.
What CERB Means For Severance Entitlements
Even with a severance package, Canadians are eligible for CERB and can apply up to December 2, 2020, but right now, both employees and their employers may be wondering if severance must be paid, particularly if the pandemic played a role in the layoff.
Yet, getting an accurate, definitive answer can be difficult because, although the Canada Labour Code does have federal labour standards, employment laws also vary from province to province. Notably, while laws specifically address severance (and in some provinces, severance during the pandemic,) it seems the language of the law is open to interpretation. Not surprisingly, employers, employees and their respective lawyers may decide to understand their provincial governments’ requirements very differently.
Consult Before Acting
To further compound the challenges, certain provinces have changed their regulations in response to the pandemic so employers and employees likely need to check with internal and external experts as well as government officials before taking action.
Generally speaking, employees are entitled to severance if fired without cause or laid off for more than a certain time period, for example, 13 weeks. In addition, some provinces, such as B.C., have extended the period, for example to 16 and then 24 weeks.
In British Columbia
In B.C., it seems that some businesses are dismissing workers and may be intentionally using the pandemic to avoid severance payments. They maintain the Employment Standards Act says severance pay isn’t necessary if people have lost their jobs “due to an unforeseeable event or circumstance” and goes on to say, “[a]n example of such a change would be the destruction of a worksite by fire or flood.” As a result of the pandemic, B.C. also added this phrase: “If a business closure or staffing reduction is directly related to COVID-19 and there is no way for employees to perform work in a different way (for example, working from home), the exception may apply to exclude employees from receiving compensation for length of service and/or group termination pay.”
Yet in response to a B.C. employer who refused to pay severance or termination pay “due to unforeseen circumstances beyond our control”, B.C. Labour Minister Harry Bains provided this statement, written by a communications staffer, when The Tyee reporter Andrew MacLeod requested an interview:
“Government has been clear that we expect all businesses to respect workers’ rights and the benefits they’ve earned. I can’t comment on a specific case before the Employment Standards Branch but businesses should be aware that they could be ordered to pay penalties on top of compensation for length of service if they are found to have illegally denied benefits.”
Statement from British Columbia Labour Minister Harry Bains
Such obviously conflicting statements are simply compounding the confusion and increasing the odds that the various parties will end up in court which is costly, time-consuming and often, incredibly stressful.
Work Reduction Under An Emergency Order
How This Is Playing Out in Ontario
In May 2020, the Ontario government amended the Ontario Employment Standards Act by introducing Regulation 228/20 which let employers cut hours and wages until six weeks after the emergency order was lifted in this province without triggering a constructive dismissal claim for severance. The declared State of Emergency will end in Ontario on September 22, 2020, which means Ontario employees may need legal help in order to argue for severance pay from their employers before the first week of November. Before this change, employers couldn’t cut pay or hours without triggering a constructive dismissal claim for severance pay.
Atlantic Canada
In Newfoundland and Labrador, employers that don’t recall employees before the statutory deadline, will have to pay severance. However, in all of the Atlantic provinces, including Labrador and Newfoundland, severance probably doesn’t have to be paid if the terminations were the result of economic or climatic conditions beyond the employers’ control.
Once again, it’s open to interpretation and may result in out-of-court settlements or prolonged legal battles.
Finding Answers
Most employees and employers will likely go online for information on severance and they’ll find news articles and opinion pieces from respected news sources as well as statements from government authorities. Of course, they’ll also come across dozens of blog posts, typically the work of lawyers and their law firms, that were created as much to solicit new business as to educate and inform.
Real Time Information
While most sources and experts are doing their best to share accurate, relevant information, it’s well worth double-checking the “facts” that will affect your business and livelihood with credible, authoritative sources at the time of action. Ultimately, accurate information may only be available on a "real time" basis, and—as policy makers and the legal community navigate the relationship between CERB & severance—the answers may change.
Reputation As Your Litmus Test
In a scenario like this where our immediate questions may only have answers in the future, we may need to make our decisions in a different way. As an employer, your reputation and public image are as much at stake as your economic sustainability, while employees must weigh the potential payoff against the legal costs and emotional toll of pursuing a severance claim.
At this time, PaymentEvolution can offer two recommendations.
Consult the Experts
First, always consult the experts and do so at the moment of decision-making. The PayEvo Human Experience (HX) team is here for you. Every situation will be different and, without clear standards and legal direction, your business shouldn't navigate this issue alone. Small and mid-sized businesses that may not have HR staff, still need to do this right. HX has experts on hand to support you and can connect you to legal experts if and when you need more information.Do What Feels Right, Ethical & Fair
Secondly, consider your instincts alongside expert advice and timely information. We may not have answers for a while, but being able to stand by your decisions can bring you peace of mind. Even if future clarity means you need to revise your past decisions, doing what feels right (and in alignment with the spirit of Canadian labour laws) is your best chance to get this right.
HX Experts at PayEvo - HR On Demand
You don't have to go it alone. Working with an expert in human resources or employment law is as easy as emailing our Human Experience Team or fill in the form below and we’ll be in touch!
Resources:
stewartmckelvey.com/thought-leadership/covid-19-faq-checklist thetyee.ca/Analysis/2020/07/06/BC-Hurting-Workers-Dodging-Pandemic-Severance-Pay globalnews.ca/news/7019830/ontario-layoff-regulations-limbo
alberta.ca/temporary-layoffs
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no credit card required.
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