During the recession of 2008, many Alberta human resource practitioners and general counsels had to address the impact of employee layoffs. With the current state of economic matters and the price per barrel of oil, many employers have made inquiries regarding whether legal severance requirements have changed over the last seven years resulting from the 2008 recession. We address some of the most common questions below:
1. Has the Alberta Employment Standards Code changed since 2008 regarding layoffs?
The simple answer is “no”. The 2008 recession did not cause the Legislative Assembly to amend the layoff provisions in the employment standards legislation. Consequently, Alberta employers are required to provide minimum statutory notice or pay in lieu of notice, even in recessionary times.
2. Have common law requirements changed since 2008? In a recession do common law notice requirements vary?
Again, the simple answer is “no”. The employer still has an obligation to provide reasonable notice if there is no cause for the termination (absent a written employment agreement to the contrary). Layoffs for economic reasons, including recession, do not abrogate the obligation to provide notice or pay in lieu of such notice at common law. The courts have consistently held that a poor economy neither extends the notice period for the employee who is seeking to find alternative employment, nor does it reduce the employer’s obligation to provide reasonable notice.
3. Can an employer avoid laying off employees by unilaterally changing terms and conditions of employment downwards to reduce payroll costs?
Any unilaterally imposed change of working conditions can potentially trigger a constructive dismissal at common law. This includes unilateral changes to wages or other compensation even if due to a dramatic change in economic conditions. In some circumstances, the employee might be obliged to mitigate any loss arising from the constructive dismissal by remaining employed throughout the notice period and the employer chooses to provide that option. But as a general rule, changing economic conditions do not allow the employer to alter pre-existing terms and conditions of employment without the consent or waiver of the employee.
4. What are the group layoff provisions under the Alberta Employment Standards Code?
Most provinces, including Alberta, require that advance notice of large scale layoffs be provided to the government before the layoff date. This requirement is to allow the government to assess the situation and prepare for the potential effects of a large-scale layoff. In Alberta, laying off 50 or more employees within a 4-week timeframe triggers the group layoff provisions under the Code.
5. Can an employer select less productive employees for layoff or possible retirement?
So long as the prohibited grounds under the Alberta Human Rights Act are not infringed, the employer can select potential employees for layoff. However, if the basis for the selection of the employee to be laid off is in any way associated with the employee’s age, health issues, etc., this could trigger a human rights complaint. Selection based on discriminatory grounds could trigger an addition to a lawsuit for severance.
6. What can an employer do?
Generally speaking, the combination of employment standards obligations, common law requirements and human rights considerations all make selective layoffs more complicated than a standard termination. Some employers have encouraged mutually agreeable job sharing opportunities, offering reduced work weeks or shorter work days, eliminating overtime where possible, etc. All factors need to be considered on a case-by-case basis and should be discussed with a legal advisor.
This publication is intended to provide our general comments on developments in the law. It is not intended to be a comprehensive review nor is it intended to provide legal advice. Readers should not act on information in the publication without first seeking specific advice on the particular matter. The firm will be pleased to provide additional details or discuss how this information is relevant to a specific situation.