Understand key issues relevant to the Alberta business community related to employment.

1. Osler Hoskin & Harcourt LLP
Damian Rigolo
Brian Thiessen
Shaun Parker
Employment Issues During an
Economic Downturn
March 29 and 30, 2016

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EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN
Introduction
• Many businesses in Calgary are facing financial pressures due to a
changing economic landscape
• As a result of the economic uncertainty, businesses could find themselves
faced with difficult employment-related decisions while trying to guard
against liabilities
• It’s crucial for businesses to maintain compliance within any employment
and labour regulatory framework while keeping abreast of any changes,
especially during periods of economic turmoil
• Businesses that stay cognizant of their legal obligations and rights will be
in a better position to manage employment issues as they arise and to
take pre-emptive action to help mitigate potential risks

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EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN
Overview
This presentation outlines a variety of employment matters that may
arise during an economic downturn and helps arm businesses with the
strategic framework to drive informed decisions on the following
issues:
1. Employee messaging
2. The termination process and strategies
3. Workforce restructuring and constructive dismissal
4. Contractors and liability

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EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN
1. Employee Messaging
• Employee messaging is particularly important:
◦ Affects morale
◦ Affects productivity and retention
◦ May avoid possible liability or additional liability
• Have clear and consistent messages about how the organization is
responding to challenging economic times
• Don’t guarantee long-term job security (reasonable notice
implications)
• Be vigilant about union approaches

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EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN
1. Employee Messaging - Strategies
• Advise employees of available support services, such as EAP
• Consider best practices for safety and security (of employees and
company interests) when communicating with employees
• Ensure compliance with job-protected leaves, subject to applicable
exceptions
• Be mindful of the appearance of discriminatory employment
practices

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EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN
2. The Termination Process and Strategies
• Employers have the right to terminate employees’ employment at any time
• Notice of termination, or pay in lieu of notice of termination, must be
provided unless termination is for just cause
• Employers can use any combination of working notice and pay in lieu of notice
• Termination without cause is the most common method of terminating
employees
• Sources of obligations:
◦ Statutory notice per the Employment Standards Code (Alberta) or the Canada
Labour Code
◦ Common law reasonable notice
◦ Contractual notice (if applicable)

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EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN
2. The Termination Process and Strategies –
Structuring the Termination
• Courts will generally award terminated employees damages for all
remuneration that would have been earned had the employee
worked through the notice period:
◦ salary
◦ benefits
◦ bonuses
◦ other incentive compensation (depends on plan language)
• Parties free to make their own bargain, subject to compliance with
statutory minimums or an applicable contract

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EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN
• Notice can be working notice, pay in lieu of notice, or any
combination of working notice and pay in lieu of notice – notice
should be in writing
• Potential structures for employee exit:
◦ Working notice of termination
◦ Immediate termination with full pay in lieu of notice
◦ Combination of working notice with pay in lieu at the end
◦ Salary continuance with or without a clawback if new employment is
found during notice period
◦ Voluntary exit
2. The Termination Process and Strategies –
Structuring the Termination

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EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN
2. The Termination Process and Strategies – Group
Terminations
• Requirements vary by jurisdiction
• In Alberta and the Federal jurisdiction, triggered on the
termination of 50 more employees in a specified area:
◦ ESC, s. 137: 4 weeks’ written notice to Minister
◦ CLC, s. 212: 16 weeks’ written notice to Minister, plus
compliance with other onerous provisions (multiple notice
recipients, joint planning committees, adjustment program,
penalties)

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EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN
3. Workforce Restructuring and Constructive Dismissal
• Employers have been under pressure to reduce employee costs:
◦ Reductions in employee salary, bonuses, incentive compensation
◦ Reduced shifts, mandatory time off
◦ Reassignment of roles - diminishment and increases in employee
responsibility
• Increased risk of unpaid wage claims
• Increased risk of constructive dismissal claims:
◦ Material changes to fundamental employment terms
◦ Unilateral alteration (without employee consent)

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EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN
3. Restructuring the Workforce and Constructive Dismissal
• Constructive dismissal is assessed using the perspective of the
“reasonable person”
• Reductions in employee compensation and constructive dismissal
risks – “rough rules”:
• Temporary layoff of non-union employees can create a significant
constructive dismissal risk
Reduction Risk
Less than 5%: Unlikely
5% to 7%: Less likely
8% to 10%: More likely
More than 10%: Significant

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EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN
3. Restructuring the Workforce and Constructive Dismissal
• Reducing constructive dismissal risks:
◦ Convince employee to agree to the change and provide
consideration – document in writing
◦ Provide reasonable notice of the change (varies by
province)
◦ Use contractual language that authorizes changes (ex.
Terms and conditions, temporary layoffs)
• Poor economy can benefit employers - consider the
practical likelihood of an employee quitting and alleging
constructive dismissal

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EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN
4. Contractors and Liability
• Use of contractors can create, and has created, risks for
companies
• Risks of a contractor being deemed an “employee”
include:
◦ Obligation to provide reasonable notice of termination and
other statutory entitlements
◦ Duty to withhold and remit income tax, CPP contributions, EI
premiums

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EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN
4. Contractors and Liability
• Courts have increasingly recognized dependent contractors. Key
factors include:
◦ Duration/permanency of the relationship
◦ Degree of reliance
◦ Degree of exclusivity
• Reasonable notice awards can be significant – ex. 26 months’ notice
in Keenan v Canac Kitchens (2016 ONCA):
◦ 62 years old
◦ Supervisor
◦ Apx. 28.5 years service

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EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN
4. Contractors and Liability – Reducing Risk
• If possible:
◦ Provide advance notice of termination
◦ Use written agreements with a termination clause that ideally
complies with employment standards minimums
◦ Use contractual indemnities
• If there is a claim:
◦ Do not abandon the contractor narrative
◦ Consider the characterization of the relationship to government
agencies (ex. CRA)
◦ Consider estoppel

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Damian Rigolo
Partner,
Employment & Labour
drigolo@osler.com
403.260.7046
Brian Thiessen
Partner, Employment &
Labour, Privacy & Data
Management
bthiessen@osler.com
403.260.7018
Shaun Parker
Associate,
Employment & Labour
sparker@osler.com
403.260.7013
EMPLOYMENT ISSUES DURING AN ECONOMIC DOWNTURN
Damian represents management in the
areas of labour arbitration, labour
relations board matters, occupational
health and safety, employment
standards, wrongful dismissal, human
rights, health care and executive
compensation. Damian also advises
clients in the employment and labour
aspects of business transactions and
acquisitions.
Brian’s practice focuses on the
managerial side of employment and
labour issues, including executive
employment arrangements, retention
arrangements, restrictive covenants,
privacy law matters, employment
disputes and human rights complaints.
He frequently advises corporations on
the employment and privacy law
ramifications of corporate transactions,
including with respect to unionized and
non-unionized employees.
Shaun has appeared before the Provincial
Court of Alberta, Alberta Court of
Queen's Bench, and the Alberta Court of
Appeal. Shaun has acted as trial counsel
for several clients, and has also acted as
counsel for clients involved in injunctions,
Anton Piller applications, and other
interlocutory matters.
Shaun also advises on corporate aspects
of labour and employment law, including
mergers and acquisitions and
reorganizations.