Constructive Dismissal during COVID-19

As COVID-19 restrictions are slowly lifted across the country, many businesses may be faced with difficult decisions regarding its employees and operations. In making decisions that affect employees, businesses need to be aware of the applicable legislation and potential risks of constructive dismissal claims.

Constructive dismissal occurs when an employer unilaterally changes the important terms of employment without the employee's consent. Major changes include changing the employee's position, compensation, hours of work, or location of work. If a case for constructive dismissal is proven, then the employment is deemed terminated and the employee can claim his or her full severance pay from the employer.

Here are a few things for employers to keep in mind before making any major changes to employment arrangements:

• Employers in British Columbia can temporarily layoff employees for 13 weeks in a 20 consecutive week period, although the period is 16 weeks in a 20 consecutive week period if the reasons are due to COVID-19;

• If the hours of work are reduced, the employee is considered laid off as soon as they earn less than 50% of their weekly wages at the regular rate (averaged over the previous 8 weeks);

• It is unwise to impose major changes to employment arrangement without the contractual right to do so or the employee’s consent; therefore, it is important to review existing employment contracts carefully;

• It is often beneficial for employers to be communicative about the difficulties faced by the business, so that the employees are understanding about the need for temporary layoffs and do not jump to conclusions about a constructive dismissal scenario.

As successful businesses depend on the retention of good employees, employers are encouraged to explore measures to reduce layoffs, such as applying for the Canada Emergency Wage Subsidy or implementing work-share programs in order to get through this challenging time.