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Employment Issues During an Economic Downturn

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Understand key issues relevant to the Alberta business community related to employment.

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Employment Issues During an Economic Downturn

  1. 1. Osler Hoskin & Harcourt LLP Damian Rigolo Brian Thiessen Shaun Parker Employment Issues During an Economic Downturn March 29 and 30, 2016
  2. 2. 2 EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN Introduction • Many businesses in Calgary are facing financial pressures due to a changing economic landscape • As a result of the economic uncertainty, businesses could find themselves faced with difficult employment-related decisions while trying to guard against liabilities • It’s crucial for businesses to maintain compliance within any employment and labour regulatory framework while keeping abreast of any changes, especially during periods of economic turmoil • Businesses that stay cognizant of their legal obligations and rights will be in a better position to manage employment issues as they arise and to take pre-emptive action to help mitigate potential risks
  3. 3. 3 EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN Overview This presentation outlines a variety of employment matters that may arise during an economic downturn and helps arm businesses with the strategic framework to drive informed decisions on the following issues: 1. Employee messaging 2. The termination process and strategies 3. Workforce restructuring and constructive dismissal 4. Contractors and liability
  4. 4. 4 EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN 1. Employee Messaging • Employee messaging is particularly important: ◦ Affects morale ◦ Affects productivity and retention ◦ May avoid possible liability or additional liability • Have clear and consistent messages about how the organization is responding to challenging economic times • Don’t guarantee long-term job security (reasonable notice implications) • Be vigilant about union approaches
  5. 5. 5 EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN 1. Employee Messaging - Strategies • Advise employees of available support services, such as EAP • Consider best practices for safety and security (of employees and company interests) when communicating with employees • Ensure compliance with job-protected leaves, subject to applicable exceptions • Be mindful of the appearance of discriminatory employment practices
  6. 6. 6 EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN 2. The Termination Process and Strategies • Employers have the right to terminate employees’ employment at any time • Notice of termination, or pay in lieu of notice of termination, must be provided unless termination is for just cause • Employers can use any combination of working notice and pay in lieu of notice • Termination without cause is the most common method of terminating employees • Sources of obligations: ◦ Statutory notice per the Employment Standards Code (Alberta) or the Canada Labour Code ◦ Common law reasonable notice ◦ Contractual notice (if applicable)
  7. 7. 7 EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN 2. The Termination Process and Strategies – Structuring the Termination • Courts will generally award terminated employees damages for all remuneration that would have been earned had the employee worked through the notice period: ◦ salary ◦ benefits ◦ bonuses ◦ other incentive compensation (depends on plan language) • Parties free to make their own bargain, subject to compliance with statutory minimums or an applicable contract
  8. 8. 8 EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN • Notice can be working notice, pay in lieu of notice, or any combination of working notice and pay in lieu of notice – notice should be in writing • Potential structures for employee exit: ◦ Working notice of termination ◦ Immediate termination with full pay in lieu of notice ◦ Combination of working notice with pay in lieu at the end ◦ Salary continuance with or without a clawback if new employment is found during notice period ◦ Voluntary exit 2. The Termination Process and Strategies – Structuring the Termination
  9. 9. 9 EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN 2. The Termination Process and Strategies – Group Terminations • Requirements vary by jurisdiction • In Alberta and the Federal jurisdiction, triggered on the termination of 50 more employees in a specified area: ◦ ESC, s. 137: 4 weeks’ written notice to Minister ◦ CLC, s. 212: 16 weeks’ written notice to Minister, plus compliance with other onerous provisions (multiple notice recipients, joint planning committees, adjustment program, penalties)
  10. 10. 10 EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN 3. Workforce Restructuring and Constructive Dismissal • Employers have been under pressure to reduce employee costs: ◦ Reductions in employee salary, bonuses, incentive compensation ◦ Reduced shifts, mandatory time off ◦ Reassignment of roles - diminishment and increases in employee responsibility • Increased risk of unpaid wage claims • Increased risk of constructive dismissal claims: ◦ Material changes to fundamental employment terms ◦ Unilateral alteration (without employee consent)
  11. 11. 11 EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN 3. Restructuring the Workforce and Constructive Dismissal • Constructive dismissal is assessed using the perspective of the “reasonable person” • Reductions in employee compensation and constructive dismissal risks – “rough rules”: • Temporary layoff of non-union employees can create a significant constructive dismissal risk Reduction Risk Less than 5%: Unlikely 5% to 7%: Less likely 8% to 10%: More likely More than 10%: Significant
  12. 12. 12 EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN 3. Restructuring the Workforce and Constructive Dismissal • Reducing constructive dismissal risks: ◦ Convince employee to agree to the change and provide consideration – document in writing ◦ Provide reasonable notice of the change (varies by province) ◦ Use contractual language that authorizes changes (ex. Terms and conditions, temporary layoffs) • Poor economy can benefit employers - consider the practical likelihood of an employee quitting and alleging constructive dismissal
  13. 13. 13 EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN 4. Contractors and Liability • Use of contractors can create, and has created, risks for companies • Risks of a contractor being deemed an “employee” include: ◦ Obligation to provide reasonable notice of termination and other statutory entitlements ◦ Duty to withhold and remit income tax, CPP contributions, EI premiums
  14. 14. 14 EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN 4. Contractors and Liability • Courts have increasingly recognized dependent contractors. Key factors include: ◦ Duration/permanency of the relationship ◦ Degree of reliance ◦ Degree of exclusivity • Reasonable notice awards can be significant – ex. 26 months’ notice in Keenan v Canac Kitchens (2016 ONCA): ◦ 62 years old ◦ Supervisor ◦ Apx. 28.5 years service
  15. 15. 15 EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN 4. Contractors and Liability – Reducing Risk • If possible: ◦ Provide advance notice of termination ◦ Use written agreements with a termination clause that ideally complies with employment standards minimums ◦ Use contractual indemnities • If there is a claim: ◦ Do not abandon the contractor narrative ◦ Consider the characterization of the relationship to government agencies (ex. CRA) ◦ Consider estoppel
  16. 16. 16 Damian Rigolo Partner, Employment & Labour drigolo@osler.com 403.260.7046 Brian Thiessen Partner, Employment & Labour, Privacy & Data Management bthiessen@osler.com 403.260.7018 Shaun Parker Associate, Employment & Labour sparker@osler.com 403.260.7013 EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN Damian represents management in the areas of labour arbitration, labour relations board matters, occupational health and safety, employment standards, wrongful dismissal, human rights, health care and executive compensation. Damian also advises clients in the employment and labour aspects of business transactions and acquisitions. Brian’s practice focuses on the managerial side of employment and labour issues, including executive employment arrangements, retention arrangements, restrictive covenants, privacy law matters, employment disputes and human rights complaints. He frequently advises corporations on the employment and privacy law ramifications of corporate transactions, including with respect to unionized and non-unionized employees. Shaun has appeared before the Provincial Court of Alberta, Alberta Court of Queen's Bench, and the Alberta Court of Appeal. Shaun has acted as trial counsel for several clients, and has also acted as counsel for clients involved in injunctions, Anton Piller applications, and other interlocutory matters. Shaun also advises on corporate aspects of labour and employment law, including mergers and acquisitions and reorganizations.

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