Employment Issues in This Economic Storm

Greg Harney
Originally published in
Business Vancouver Island - February 2009
by Greg Harney

The recent meteoric decline in the real estate and securities markets will obviously ripple through many organizations, impacting both employers and employees alike.

It is important that employers and employees know their rights with respect to their employment contracts when businesses are being reorganized, down sized, or in fact closed.

Whether or not there is a written engagement letter or contract, the employer has a contract with the employee that is governed by the terms of their agreement as well as the Employment Standards Act and other relevant legislation in British Columbia.

Before an employer takes action with respect to dealing with the contract of the employee, the employer should seek legal advice or review the Employment Standards Act to understand its obligations.

Likewise, the employee who is being dealt with by an employer should be aware that if the termination is not a temporary layoff or termination of the contract for just cause, the employee is entitled to reasonable compensation in lieu of notice.

The Employment Standards Act sets out certain criteria that will absolutely apply to the employer and employee, but the common law supplements the Employment Standards Act with certain precedents with respect to what is reasonable notice when the contract of the employee needs to be terminated.

In addition to the Act and the common law, the employer may have a written engagement letter restricting the application of what would be considered the common law and reasonable notice.

Large scale employers should be cognizant of the provisions of the Employment Standards Act that relate to the termination of groups of employees within a two month period.

Large scale group terminations can trigger very onerous provisions with respect to notice to the members of the employee group.

While there is some debate about the application of those provisions depending on the circumstance of a termination as opposed to a seasonal layoff, the employer has to seriously consider the impact of wholesale terminations before it finds itself subject to the provisions of the Employment Standards Act.

The applicable notice periods will vary depending on the circumstances of the particular employee.

For instance, the length of employment is a central issue to be considered, but also the circumstances of how the employment arose can be quite relevant when determining what would be considered reasonable notice.
If an employee is wooed to an employer not anticipating the economic crisis, the employer may be responsible to pay a greater amount of compensation in lieu of a longer period of notice.

The skill level of the employee, the age of the employee, and the nature of the job are among some of the other factors to be considered when arriving at a conclusion as to what would be reasonable notice period.

In summary, while the terms of the agreement and the Employment Standards Act may appear to set out a formula dealing with employees during the economic downturn, the employer and employee must carefully consider many issues when the employee contract is being terminated.