Covid-19 Options for Small Employers

Prepared By Jennifer Sykes

The content of this article is intended to be informational only.  We caution you against using or relying upon any information contained in this article without first seeking legal advice regarding your particular matter. All matters arising from the use of our website, including this article, shall be governed by Alberta law and shall be within the exclusive jurisdiction of the courts of Alberta.

UPDATE - COVID-19 Options for Small Employers 

On March 17, 2020, we originally published this article. As the situation has evolved, new information has come to light which may be helpful for small businesses as we all navigate the challenges that the COVID-19 pandemic has created. 

These are difficult times for small employers. With business shut-downs already in place or imminent, how can small employers survive? Typical small business overhead largely consists of rent, operating costs, staff costs and business taxes. Reducing these expenses will be key to the survival of many businesses. 

This article deals with legal options for reducing staff costs. 

Small employers typically do not have unionized employees. This article is for employers that do not have unionized staff. 

Employers have a number of potential options regarding employees. 

If the business context allows, the employer may be able to continue the full-time employment of all employees and try to keep them productive through work-at-home arrangements. This option does not reduce employee expenses and may not be possible if finances simply do not allow for this option. 

If the business context, or fiscal realities, do not allow the employer to continue full-time employment, what are the options? 

Terminating the employment of employees is an option but there are legal consequences. Severance will generally be required to be payed. For longer term employees this could be very expensive in the short term. Paying severance may exacerbate the short-term fiscal difficulties of the business. In severe cases this may be an option, but legal advice should be sought before taking this path. 

Employers that can ill-afford severance obligations must be careful not to inadvertently trigger these obligations by “constructively” dismissing employees. Constructive dismissal is a complicated legal concept that goes beyond the purview of this article. However, a few “don’ts” in this regard will be touched upon below. 

If a business decides to shut down due to quarantine requirements, employees may be required to quarantine at home. In this case, employees may have access to the Canadian Emergency Response Benefit. This might only partially compensate employees. When and how a quarantine would work is complex and legal advice should be sought if an office quarantine option is pursued. 

The Alberta Employment Standards Code now allows employees to take 14 days of job-protected leave (unpaid) if they are required to self-isolate or are sick or caring for certain family members. 

Another, more long-term option for employers is temporary employee lay-offs. Notice may be required for a lay-off. The length on notice, either 1 week or 2 weeks, will depend on how long the employee has been employed by the employer. Layoffs can last for up to 120 days (previously layoffs could only last for 60 days, but this has been extended in light of COVID-19). There is no obligation for employers to pay employees that are laid off. Emergency response benefits (CERB) may be sought by laid-off employees. 

The problem with this option is that employers will, absent other facts, be required to pay employee their regular pay during the notice of layoff period. Layoffs could trigger claims of constructive dismissal, depending on circumstances. Legal advice should be sought regarding a lay-off option. 

A combination of quarantine, paid leave and lay-offs may be the preferred option. This option would require careful consideration. Often a carefully tailored approach looking at an employer’s specific needs and workforce is preferable to a “one size fits all” solution. 

Caron & Partners is also a small business, and we understand the challenges that employers are facing in these difficult times. For further information or for legal advice, please do not hesitate to contact us.