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Job Loss during COVID-19: Government Subsidies and Benefits

Many businesses and workers have suffered severed financial loss as a result of mandatory business closures resulting from COVID-19. Fortunately, the government of Canada and the province of Ontario have stepped up by introducing a number of programs to help alleviate the negative impact of the economic downturn. In this blog post we will highlight a few of the government programs designed to assist workers who have been impacted by the pandemic and also commercial landlords and tenants.

First, Am I Entitled to Notice or Severance from my Employer?
The Employment Standards Act (ESA) sets out the minimum obligations of employers following the termination of employment, including notice of termination (or pay in lieu thereof) and severance pay obligations. If you have an employment contract that does not specify that your “ESA entitlements represent your full entitlements on the without cause termination of your employment,” you may be entitled to common law notice, which provides for more generous notice requirements.

Whether or not you are entitled to common law notice is based on the terms of your employment contract; and the amount of such notice is dependent on each unique set of circumstances. Terminated employees often contact us advising that “they were the best employees” and they consistently received positive performance reviews. We often hear from terminated employees “how can my employer terminated me and then post a job opening for my former position right away?” These concerns are actually not relevant to the severance equation. As an employees can resign at any time for no reason, any employer can terminate an employee without cause at any time for no reason so long as it is not a discriminatory reason. As a result, your strong performance or the fact that your job may be replaced by another candidate, is not relevant in determining the severance calculation.

The more relevant factors in determining severance entitlements under the common law in Ontario, include but is not limited to: (i) the age of the employee at the date of dismissal – with employees of more advanced age typically entitled to greater notice periods; (ii) the duration of service in the employment, with longer-service employees entitled to more enhanced severance pay; (iii) the seniority or position of the employee, with greater notice periods being awarded to more senior employees with specialized positions; (iv) and the availability of similar employment. During COVID-19, the job market has frozen and it will be most challenging to secure a new job following a termination of employment, entitling the employee to greater severance pay.

The government has also introduced programs to protect workers and businesses that have been negatively impacted by the global pandemic. More details on these programs are provided below:

Benefits for Employers and Employees
Millions of employees have been terminated or temporarily laid-off due to business closures resulting from COVID-19. If you have been terminated from your employment as a result of COVID, you may be entitled to enhanced severance pay given the difficulty you are likely to confront in obtaining replacement employment in a timely manner given the economic downturn. You can contact our employment law firm for a free consultation to discuss your employment rights.

The government of Canada has introduced a number of programs to assist employers and employees that have suffered as a result of the COVID-19 pandemic.

Canada Emergency Response Benefit
The Canada Emergency Response Benefit (CERB) is available to workers (i.e., employees or independent contractors) who have lost their job on account of COVID-19. The Benefit is available to workers:

  • Residing in Canada, who are at least 15 years old;
  • Who have stopped working because of reasons related to COVID-19 
  • Who had employment and/or self-employment income of at least $5,000 in 2019 or in the 12 months prior to the date of their application; and,
  • Who have not quit their job voluntarily.

The amount of the CERB benefit is $2,000.00 per month for a period of four (4) months.

Canada Emergency Wage Subsidy
The Canada Emergency Wage Subsidy is available to employers whose revenues have decreased by at least 30% as a result of COVID-19. The benefit covers up to 75% of employee wages on the first $58,700 employees earn, or up to $847 per week. The program covers wages from March 15 to June 6, 2020 – and may be (but hopefully will not be required to be) extended should the pandemic continue on for longer than anticipated.

The purpose of the CEWS is to enable employer’s to re-hire workers or at least refrain from laying-off workers due to the economic downturn. To receive the wage subsidy, the employer must be eligible as defined by the benefit, which includes various types of entities (sole proprietor, partnership, corporation, non-profit, etc.) that has suffered an eligible revenue reduction (i.e., 15% revenue decline in March 2020 and 30.0% thereafter for April and May 2020).

Canada Commercial Rent Assistance Program
The Commercial Rent Assistance Program was introduced by the government of Canada to reduce rent for small businesses that have been impacted by COVID-19. The program will provide non-repayable loans to commercial property owners to cover 50.0% of three monthly rental payments for the months April, May, and June 2020. The loans will be forgiven if the property owner agrees to reduce the small business tenants rent by 75.0% during the loss period. The small business tenant will then cover the 25.0% remaining rent.

To be eligible to benefit from the program, eligible businesses will have to pay less than $50,000.00 in monthly rent and have seen their revenues decline by 70.0% as a result of COVID-19 during the three-month period.

If you are an employer or employee residing in Ontario and have questions regarding the governments new benefit programs to assist your business during the economic downturn causes by COVID-19 we would be happy to provide you with guidance. In addition, commercial landlords and small business tenants may require an understanding and interpretation of the Commercial Rent Assistance program to ensure it is implemented in accordance with the benefits parameters.

At Goldstein Law, we practice employment law, commercial leasing, and real estate litigation disputes. We are well-positioned and have the expertise to advise our clients on matters arising out of the COVID-19 crisis.

Employment Standards Act Obligations

Under the Employment Standards Act (ESA), employers are required to provide employees minimum entitlements upon the termination of employment, which includes but are not limited to the following:

-Up to a maximum of 8 weeks of termination pay, calculated as one-week of termination pay per year worked; and

-If the employer has a payroll over $2.5 million and the employee worked for the company for 5 or more years, they would be entitled to severance pay equivalent to one week per year worked plus the fraction of the year worked prior to termination.

When you are terminated from your employment, the employer is obligated to provide these minimum ESA payments by your next scheduled pay date.  Employees’ entitlements to severance pay are greater than the requirements of the ESA, which only sets out the minimum standards. In fact, the common law, or judge-made law in Ontario, which reflect a series of cases in the employment law realm is what governs employees entitlements on termination.  According to this judge-made law, employees can be entitled to one-month per year worked, or more, termination pay, depending on the circumstances.

The Court will take into consideration a variety of factors in determining the quantum of termination pay required in the circumstances.  The factors include (a) age of employee; (b) likelihood and ease of re-employability; (c) duration of employment; (d) circumstances around the dismissal; and (e) specialization of the position and level of seniority at the company.  All of these factors are relevant to the analysis into the appropriate termination pay in the circumstances.

It is important to note that, when an employee is terminated, they may be offered the minimum requirements under the ESA, and asked to sign off on a Full and Final Release, preventing you from bringing any future employment-related claim whatsoever in exchange for accepting the initial offer. Based on our discussion, the ESA entitlements are a minimum, and the employee should be discouraged from signing the Release absent a consultation with experienced employment counsel. If you do, in fact, retain an employment lawyer to negotiate an enhanced severance package, the employer will still be required to pay your minimum entitlements owing under the ESA, irrespective of a signed Release, while the negotiation is ongoing.

If you have any questions or concerns about your severance package, please do not signed the settlement documents at first instance before consulting with an experienced employment lawyer regarding your rights and obligations.

What Are Your Employers’ Obligations on Termination?

Employers have various obligations upon terminating an employee from employment, including but not limited to complying with the Employment Standards Act, 2000, S.O, 2000, c.41 in Ontario.

If you have been terminated from your employment without cause, your employer is required to pay a minimum number of weeks of compensation in accordance with the Employment Standards Act in Ontario, equivalent to one-week of pay per year worked, up to a maximum of 8 weeks’ of termination pay. It is illegal for an employer to pay a termination package that does not comply with at least the minimum standards set out in the Employment Standards Act.

The minimum standards include a requirement to pay termination pay, severance pay, and continue employer benefits through the statutory notice period.  Termination pay must be paid on the basis of one-week per year worked, up to a maximum of 8 weeks.  Severance pay is different than termination pay.  Only those employees that have been employed for longer than 5 years for an employer with a payroll of greater than $2.5M will be entitled to severance pay upon termination of their employment. The Employment Standards Act governs the formula to calculate severance pay should you be entitled.

Employers are required to pay terminated employees their base minimum statutory entitlement 7 days after termination or on the employees’ next pay date, whichever is later.  This statutory pay must be distributed irrespective of whether the employee has executed a signed release, which an employer will typically require in order to formalize the severance.

Employees that are employed in certain designated, federally regulated sectors (i.e., telecommunications, banks, airlines, etc.) are entitled to benefits as outlined in the Canadian Labour Code, which codifies a set of employer obligations upon terminating employees in the designated sector.  Many of the rights and obligations therein are similar to those enumerated in the Employment Standards Act.

If you have been terminated from your employment, consult with an experienced employment lawyer to determine if your employer has upheld its obligations on termination.

What is “Wrongful Dismissal”?

Many laypeople talk about being ‘wrongfully dismissed’ from their employment – without understanding what the legal concept of wrongful dismissal really is.

Employers have the right to terminate an employee, at any time, for any reason whatsoever if they are not alleging just cause for dismissal, so long as the employer provides the terminated employee with sufficient notice of termination, or payment in lieu thereof.

The Employment Standards Act sets out the statutory minimum requirements that an employer must comply with upon the termination of an employee in Ontario. There is a presumption at law, absent an express clause in an employment contract restricting the amount of termination pay, that an employee is entitled to ‘common law’ notice pay, in addition to the statutory minimums as governed by the ESA.

Reasonable notice at common law is governed by precedent cases and requires a fact-specific inquiry – there are no hard-and-fast rules to determine the length of reasonable notice; however, one-month per year worked is a rule-of-thumb often employed in Ontario. Accordingly, a claim for ‘wrongful dismissal’ is the basis for an allegation that the employer has not provided sufficient severance upon termination, and the employee is seeking damages a result.