The New Era of Employment Law

How COVID-19 is changing the workplace

The New Era of Employment Law

As COVID-19 has now reached every part of the world, both employers and employees have been confronted with the unique workplace issues it presents. The advice that employment lawyers used to give on issues such as work refusals, sick leave, layoffs, and accommodation (to name a few) may no longer be right in today’s unprecedented circumstances. While it is difficult to predict what the future holds, the impact of COVID-19 will be felt in the workplace long after the pandemic is over.

Pre-crisis, the common law was well-settled that absent an express provision in the employment contract (except for seasonal work) an employee who was laid off without their consent could claim a constructive dismissal, triggering the employer’s obligation to pay severance. Any unilaterally imposed fundamental change in hours, compensation, or duties would also constitute a constructive dismissal. The assessment of reasonable notice is determined with reference to the well-known Bardal factors: the employee’s age, length of service, the character of employment, and the availability of similar alternative employment.

In the heart of the crisis, a new reality was defined by a provincial state of emergency and various orders from health officials requiring many non-essential businesses to close or significantly reduce operations. To survive, thousands of employers had to scale back their workforce to reduce their biggest expense, payroll. Employees in turn chose to accept wage reductions or temporary layoffs to keep their jobs. The advice that lawyers gave was necessarily focused more on the practical than the legal.

The legal landscape shifted constantly and produced a steep learning curve. The provincial government introduced the COVID-19 leave to provide job security. The federal government rolled out billions in support, including the 75% Canada Emergency Wage Subsidy touted as the largest economic program in Canada’s history. It also streamlined existing programs such as the Employment Insurance SUB Plan and Work-Sharing programs to fit the circumstances. Professional advisors had to study these programs quickly and advise their clients on how to make the best use of them. The effective use of these programs will serve employers well, both now and into the future.

When the dust finally settles, the legal fallout of the crisis will be enormous. Class actions have already been launched. The courts will be asked to reconsider foundational principles of employment law. For example, whether a temporary layoff or a substantial reduction in hours amounts to a constructive dismissal in the circumstances of COVID-19 and if the common law doctrine of frustration (or its codification in section 65(1)(d) of the Employment Standards Act) might apply to relieve an employer of its severance or termination pay obligations if it was forced to reduce operations or shut down. Judges will also consider the effects of the crisis on the job market when assessing the employee’s duty to mitigate and whether the length of the reasonable notice should be increased to reflect the unavailability of work. All of this will require lawyers to rethink how they advise their clients in the new era of employment law.

COVID-19 has also caused a rapid and a radical shift in workplace dynamics. The previously slow evolution from the autocratic leadership model of the past has now accelerated toward a more balanced environment based on mutual respect, inclusivity, flexibility and shared goals. Now is the time for innovation and creativity. Companies resistant to work-from-home policies have been pushed to embrace technology and allow remote working. Health, safety, and employee well-being now overshadow the bottom line. Accommodation of family circumstances through flexible schedules is essential, as the nine to five no longer exists. The continuation of these initiatives into the “new normal” will be foundational to the recovery of the economy and will likely define the businesses that come out ahead of the game.