Covid-19 Employment Law Update

The Covid-19 pandemic has severely impacted employers and employees alike. This article explores the rights and obligations of both employers and employees in these circumstances.

Termination during self isolation or illness

The BC Government has introduced new Covid-19 leave provisions, for employees who:

  • are unable to come to work because they are in quarantine or self-isolation in accordance with public health guidelines,
  • are directed by their employer not to work due to concern about exposure to others,
  • are outside of BC and unable to return to work due to travel restrictions,
  • are required to take time off to care for a child or dependent adult for reasons related to Covid-19, including a school, daycare, or similar facility closure

Employers may not terminate the employment of workers who are unable to come to work for these reasons, and will be required to give the employee the same job, or an equivalent, once they return to work.

The new Covid-19 leave provisions are retroactive to January 27, 2020, are in addition to the 3 days of unpaid sick leave already allowed in BC, and are unpaid except as per any paid sick leave provisions in the worker’s employment agreement.

Other relevant forms of leave

An employee is entitled to 5 days of unpaid family responsibility leave, if they are required to care for a child or immediate family member. As well, an employee is entitled to 27 weeks of unpaid leave to care for a terminally ill family member, and up to 36 weeks of unpaid critical illness or injury leave (up to 16 weeks if the family member is older than 19 years). Employment can not be terminated while an employee is on leave.

Requiring employees to stay home

Employers have a right to require employees to stay home if they are sick, and employees have a duty to report if they are unwell.

Temporary layoffs

A temporary layoff occurs when an employee is given less or no work, with a plan that they will return to their regular work schedule at some point in the future. A reduction in hours worked is considered a layoff as soon as the employee earns 50 per cent or less of their weekly wages, at their regular rate.

An employee in British Columbia can be laid off only if:

  1. the employee agrees to the layoff,
  2. the layoff is normal and expected for the industry, or
  3. the layoff is permitted by an employment contract that was in place prior to the lay off.

It is up to the employer to prove that the temporary layoff falls into one of the allowable categories. If they can not, the layoff will likely be considered a termination of employment.

If the temporary layoff is permitted, the maximum length of the layoff permitted by the Employment Standards Act is 13 weeks within a 20 week period.

Termination

If a layoff is considered a termination, the notice provisions of the Employment Standards Act will apply, and the employer will be required to provide the employee with written notice of termination, and/or payment in lieu of notice, which is at minimum based on the requirements of sections 63 and 64 of the Act.

Employment impossible to perform

It may be impossible for an employee to perform the work required of them due to unforeseen circumstances. Section 65(1)(d) of the Employment Standards Act states that sections of the Act (63 and 64) that set the minimum notice of termination required do not apply “to an employee employed under an employment contract that is impossible to perform due to an unforeseeable event or circumstance”.

This section, however, only applies to the minimum amount of notice required pursuant to the Employment Standards Act. There is a separate common law requirement to compensate an employee on termination which is separate from that required under the Act. It would be difficult, but may be possible, for an employer to claim that an employment agreement has been frustrated in common law as well, thereby possibly avoiding the common law compensation provisions.

Government Assistance

The Government of Canada has introduced several programs to assist employers and employees. As these programs are frequently updated, the government’s website, or your local chamber of commerce or business association, is the best source for more information.

If you require guidance with employment issues, we are here to help.

 

Article written by: Kelvin Scheuer, Lawyer, Beacon Law Centre

 

Contracts, Covid-19, and You

Business disruption is in the air, literally. What does that mean for contracts, especially leases? Like many things, the answer is “it depends”…

Force Majeure

Many contracts, including commercial leases, have a clause for force majeure.  Whether it is called that or not, its effect is to excuse failure to perform caused by an event that is reasonably beyond the party’s control.

For this kind of clause to apply, the event must actually prevent performance, not just make it more expensive or onerous.  Our courts are reluctant to excuse non-performance of contracts.

If it applies, depending on its wording, the clause may allow a person to:

  • extend the time to perform,
  • prioritize one delivery over another,
  • suspend your obligation until the event ends, or
  • cancel the contract without liability.

Therefore, the specific wording matters.  Each clause must be looked at carefully.

Frustration of Contract

The legal concept of “frustration of contract” applies to all contracts.  A person might also be able to rely on this concept, in the face of a sudden crisis, to avoid a contract such as a lease.

Frustration is also based on an unexpected event that that is not the fault of either party to a contract.  Again, our courts look critically at each situation, and set a high bar to finding that a contract was frustrated. The event must either make the contract impossible to perform (for example, the building to be used was destroyed), or radically change the parties’ purpose in making the contract (for example, the event that the contract was all about was cancelled).

Warning: frustration of a contract does not just result in performance being delayed or suspended.  It cancels the contract entirely. If a tenant is only looking for temporary rent relief, and not to terminate the lease, this is not a good option.

Practical Alternatives

Even where the options above are not relevant or desired, other contract clauses will apply and should be reviewed: e.g., liability and damages, dispute resolution, and termination.

It may well be more practical to negotiate temporary adjustments that acknowledge the reality but preserve the business relationship.  In that case, document all changes carefully.

Sound, timely legal advice is so important at times like this. Review documents carefully and do the cost-benefit risk analysis before acting.

Article written by: Karl Maier, Lawyer, Beacon Law Centre

New Data Breach Reporting Rules

Have you ever:

  • lost your mobile phone?
  • had your laptop stolen?
  • misplaced a USB drive?

Under new federal rules that took effect last fall, you may be required to report these incidents to the federal privacy commissioner. Reporting is mandatory if the data breach creates a real risk of significant harm to an individual. The degree of risk will depend on several factors, such as the potential for physical or financial harm, humiliation, or identity theft. The sensitivity of the lost information, and the possibility that is being or will be misused, must be considered.

Currently these rules apply only to businesses that are federally regulated, or organizations that share or move personal information across borders. Most BC businesses, if they only collect and use personal information in BC, are not subject to federal privacy laws. Instead, they must comply with BC’s Personal Information Protection Act (“PIPA”. PIPA does not currently require mandatory reporting, but complying with the federal law is considered best practice, and will likely become the law in BC in the near future.

Beacon Law Centre Funds Special Project for Community in the Congo

Beacon Law Centre’s staff have sponsored a child in the small village in the Democratic Republic of the Congo through World Vision Canada for the past 13 years. The team is always delighted to receive photos and correspondence from our sponsor, Emely, and are proud to be able to make a difference in her future. This past year, we found out that one of the challenges for Emely’s family is their access to clean water. Our immediate reaction to hearing this news was, what can we do to help! After corresponding and planning with World Vision Canada, we are thrilled to announce that Beacon Law Centre has funded a special project to supply Emely’s family and community with a reliable water source. Over the next few months we will be receiving progress reports on the project from World Vision Canada.

Community Involvement – Giving Back

At Beacon Law Centre we believe in giving back to our community and are proud to have contributed to the following causes and programs in 2018:

Saanich Peninsula Community Foundation

The Saanich Peninsula Community Foundation is committed to improving the quality of life on the Saanich Peninsula by promoting and increasing responsible, effective and accessible philanthropy. The Foundation uses entrusted funds to serve the interests of all Saanich Peninsula residents in education, welfare, culture, environment, health and recreation.

www.sp-cf.ca

Saanich Peninsula Hospital & Healthcare Foundation

The Saanich Peninsula Hospital & Healthcare Foundation is a registered charity that raises funds in support of the Saanich Peninsula Hospital. The Saanich Peninsula Hospital provides local access to a variety of health care services, ranging from emergency service to general surgery and a long-term care unit.

www.sphf.ca

ORCCA Dental Clinic

ORCCA Dental Clinic’s purpose is to provide children and adolescents under 19 years of age from low-income families access to oral care in a not for profit setting. It is based on the beliefs that all children and adolescents have the right to healthy oral care and that effective oral care positively transforms the health and lives of children and adolescents.

www.orccadental.org

Rotary Club of Sidney by the Sea – Monte Carlo Night

The Rotary Club of Sidney by the Sea has been in Sidney since 1994 and supports local causes as well as international projects. Through social events and activities they offer networking opportunities to help build personal and professional connections. The “Monte Carlo Gala” is the club’s premier fund raiser of the year, and enables Rotarians to support many charitable projects. For the 2018 Gala, proceeds supported the Peninsula Youth Health Clinic, Mt. Newton Centre Society, and Sidney Elementary School.

www.sidneyrotary.com

BMO Lanes & Lyrics Sponsorship – BC Children’s Hospital

BMO bankers from across the BC raise funds for BC Children’s Hospital Foundation and Kids Help Phone at the annual Lanes & Lyrics. Teams compete to raise the most funds by performing on stage and lacing up their bowling shoes.

www.bmolanesandlyrics.com 

Brentwood Bay Community Association

The Brentwood Bay Community Association is a non-profit society formed by a group of residents and volunteers. The purpose of this Society is to strengthen the community of Brentwood Bay by providing arts and cultural events for all ages. Some of the Society’s events include; Music in the Park, The Brentwood Bay Community Festival, Christmas Light Up in Brentwood Bay, Barney Bentall’s Cariboo Express and The Empourium Sessions.

www.brentwoodbay.info

Balfour’s Friends

The Balfour’s Friends Foundation aims to assist people in need by receiving and maintaining funds in order to provide supplementary aid to pet owners in need to ensure proper veterinary care can be supplied to their pet. The Foundation is non-profit and relies on donations to support pet owners.

www.balfoursfriendsfoundation.webs.com

World Vision Canada

For over 12 years, the team at Beacon Law Centre have had the option to wear jeans to work on Friday’s for a small donation. These funds go directly to a World Vision sponsor child in a developing county. At the end of the year with the leftover funds, the team gets to decide on a special gift for our sponsor’s community.

www.worldvision.ca

Firm Management Charity Golf Tournament

Each September, Firm Management hosts the Firm Management Corporation Charity Golf Tournament at the Cedar Hill Golf Course. Proceeds from the event are donated to the Saanich Peninsula Hospital Foundation and Victoria Hospice Foundation. The event provides a perfect opportunity to give back to the community while enjoying one of Victoria’s most beautiful courses, capped off with dinner among friends.

www.firmmanagement.com/about-us/community-support

Angel Flight of BC

Angel Flight of BC provides free air transportation to cancer patients requiring travel to treatment at cancer clinics and hospitals in Vancouver, Victoria and other cancer centres within the approved Angel Flight areas of operation. They are an entirely volunteer-led organization with no paid employees.

www.angelflight.ca

Island Swimming

Island Swimming provides a swimming community in Greater Victoria where success is measured beyond podium results. Island Swimming operates programs for swimmers of all ages in Victoria, Saanich and Colwood. They believe in the potential of all athletes and promote swimming as a long-term development and life long skill.

www.islandswimming.com

Sidney Piranhas Swim Club

The Piranhas Swim Club is a competitive swim club on the Saanich Peninsula that promotes the sport of swimming in a safe and enjoyable environment. The goal of the club is to provide every member an opportunity to improve swimming skills and achieve success at his or her level of ability, from beginner and intermediate to Provincial champions.

www.sidneypiranhas.com

Cat’s Cradle Animal Rescue

Cat’s Cradle Animal Rescue was founded in 2006 because of the acute need for rescue services for animals with special needs, such as serious medical conditions. They rescue, rehabilitate, spay/neuter, and re-home distressed, abandoned, or neglected cats and dogs considered unadoptable because of health, age, appearance, or temperament.

www.catscradleanimalrescue.com

Wounded Warriors Canada

Wounded Warriors Canada honours and supports Canada’s ill and injured Canadian Armed Forces members, Veterans, First Responders and their families. With support of caring Canadians and Canadian businesses from across the country, they are able to deliver a national slate of mental health programs and services that are adaptive, innovative and evidence-informed.

www.woundedwarriors.ca

Employee, Independent Contractor, or Somewhere in Between? Beware the “Dependent Contractor”

For most people, the days of retiring with a gold watch after 40 years of service with the same company are long gone. In fact, many reports indicate that Millennials prefer short term or temporary work assignments, perceiving that this provides more freedom and flexibility.

It is becoming more common for these “freelance” workers to be classified as independent contractors rather than as employees. However, the common law recognizes another category of worker, that of the “dependent contractor”. The risk of misclassifying a worker’s status can be very costly for an employer, because dependent contractors are entitled to severance if terminated.

While the maximum severance obligation under the Employment Standards Act is eight weeks, employees and dependent contractors are entitled to much more than that under the common law. It is not unusual for a judge to award up to one month of severance for each completed year of service, up to a maximum of 24 months (although in some recent cases the courts have awarded as much a 30-36 months). So terminating a long-time contractor can have severe consequences if they are found to be a dependent contractor.

Employee or Contractor

Based on its understanding of the law, the Canada Revenue Agency lists six factors to determined whether someone is an employee or a self-employed contractor:

  1. Control – who determines how, when, where and by whom the work gets done
  2. Tools and Equipment – who provides the tools to provide the service
  3. Subcontracting or hiring assistants – must the services be provided personally, or can the worker subcontract or hire assistants
  4. Financial risk – who bears the financial risk of the worker not fulfilling the obligations of the contract, and who pays the expenses
  5. Responsibility for Investment and management – who makes the business decisions that affect profit and loss, and has the worker made an investment in its business in order to provide the services
  6. Opportunity for profit – to what degree does the worker control the revenue and expenses (being paid by piece rate or commission is not considered to affect the opportunity for profit)

The courts and the CRA look at all of these factors as a whole, and may consider other relevant factors, such as whether the work is integral to the business they are working for. One of the main questions ask is “whose business is it?”

Employers may be tempted to classify workers as independent contractors to avoid overtime, vacation pay and severance obligations, as well as payroll remittance obligations. However, two recent decisions in the BC courts confirm that the law recognizes a status somewhere between employee and independent contractor: the dependent contractor. The courts have developed this concept to provide protection to economically vulnerable and dependent workers who are not employees and thus do not have the legislative protections provided to employees.

Independent or Dependent Contractor

In determining whether a contractor is an independent contractor or a dependent contractor, the courts will look at these factors:

  • Whether the contractor was largely limited to the service of the principal, or does the contractor provide the services to others as well
  • Whether the relationship was long-standing – the more permanent the term of service, the more dependent the contractor
  • Whether the parties relied on one another and closely coordinate their conduct

The court has stated that dependent contractors are entitled to the same reasonable notice of termination as an employee. As stated above, the Employment Standards Act required termination notice equal to one week of notice for each completed year of service, to a maximum of eight weeks. However, under the common law an employee is entitled to “reasonable notice”, which is often equated to one month of notice for each completed year of service. It should also be noted that a contractor can be found to be dependent even if incorporated.

Takeaway

Employers can use written contracts to limit the amount of notice that must be given to an employee  or a dependent contractor upon termination, reducing the notice/severance requirement well below what would be awarded under the common law. Written contracts are also recommended for contractors so that they will be bound by the same duties as employees when it comes to confidentially and intellectual property.

If you have any questions or would like to put written contracts into place, we’re here to help.

Federal Tax Proposals are Bad for Business

In July 2017, the federal finance minister announced proposals that would drastically affect the taxation of small business corporations. Income splitting, access to the capital gains exemption, “surplus stripping” and passive corporate income were all targeted. The government has since backed off on the surplus stripping, and the capital gains exemption proposals (for now), but is proceeding with the other proposals in somewhat amended form.

Income splitting with family members who have not contributed to the business will be severely limited. Additionally, passive income earned in a corporation will be taxed at a higher rate, reducing the ability to defer taxes by leaving profits in the corporation – a common retirement strategy for many Canadian business owners. Thankfully, existing investments will now be grandfathered, and the first $50,000 of annual passive income should not be affected. The finance minister stated that these proposals are required so that business owners don’t have “unfair tax advantages” that are not available to employees, and “pay their fair share”. In our view the proposals show a disregard for the risks that business owners and their families take to start and run a business.

Is Your Business Ready for Sale?

We have helped hundreds of clients with the purchase or sale of a business, and we have seen first had the difference it makes when the business is ready for sale. Fewer delays, a smoother closing, lower legal and accounting costs and sometimes even a higher sale price are some of the benefits for the prepared seller.

Here are some steps you can take now to get your business prepared for a sale:

  1. Get the financial records up to date.
  2. Separate personal assets and expenses from the business.
  3. Ensure the corporate records are up to date.
  4. Update your operations manual (or create one).
  5. Document and organize the licenses, permits and significant contracts.
  6. Put key employment and independent contractor agreements into writing.
  7. Resolve outstanding business disputes (with customers, suppliers, ex-employees, etc.).
  8. Prepare an asset list.
  9. List any consents required for the sale (landlord, franchisor, lender, etc.).

We offer a comprehensive Business Legal Checkup to identify outstanding legal issues, and our Business Sale Navigator® program is designed to assist business owners through the sale process. If selling your business is on your radar, give us a call.

Marijuana and the Workplace

Medical marijuana has been legal in Canada since 1999, and the recreational use of marijuana is expected to become legal in 2018. While marijuana use is not new, employers are becoming concerned about the impact that legalization and the likely increase in consumption will have in the workplace. Specific concerns include the operations of motor vehicles, decreased work performance and attendance.

The Human Resources Professionals Association recently published a white paper with the following suggestions for employers:

Employers have a duty to accommodate the disabilities of employees up to the point of undue hardship. This may include accommodating an employee’s use of medical marijuana, and even accommodating substance abuse and addictions. A zero-tolerance policy could be discriminatory against employees who use medical marijuana to treat or relieve the symptoms of a disability. Thus, zero-tolerance policies are not recommended, except where sobriety is a bonafide occupational requirement (safety-sensitive workplaces).

Employers should consider a clear drug policy that treats medical marijuana like other prescriptions, and that defines what it means to be impaired. Marijuana can be taken in may forms and doses, not all of which will affect an employee’s ability to complete their essential job duties.

Employer drug testing policies need to be kept up to date because testing technology is rapidly advancing, and a clear method of determining impairment is not yet available. Other policies should be reviewed and updated as the law develops in this area.

Earlier this year the Supreme Court of Canada ruled in favour of an employer that fired a worked who was involved in an accident with a front end loader and then tested positive for cocaine. The employer’s drug and alcohol policy required that employees disclose any dependency or addiction issues. If they did, they would be offered treatment. If they didn’t, were involved in an accident, and tested positive for drugs or alcohol, they would be fired. In this case, the employee never disclosed his drug use to the employer. After termination, he filed a human rights claim, arguing that he was fired because of his addition (which was discriminatory). The court disagreed and held that he was fired for violation the employer’s policy, a policy that was not discriminatory because he was capable of complying with it.

Policies that require disclosure of alcohol and drug dependency or addiction issues may be valid and enforceable. Policies that are impossible for an addicted employee to comply with should be avoided. Employers should make it clear that disciplinary actions are not taken because of the employee’s addiction, but because of a breach of the workplace policy.