A Recession is Coming: Know your Employment Rights

Alberta, like the rest of the country, is weathering challenges. The year 2022 was marked by increasing inflation, which led to an increase in interest rates and a reduction in consumer spending. According to the latest report from Deloitte, the province is “now expected to enter a recession given its high debt levels (trailing only British Columbia and Ontario) and the reduction in oil demand from the United States.” Unfortunately, with a recession comes layoffs, so it is best to review legal requirements on employers in case of layoff and termination to ensure all legal rights are respected in these unprecedented times.

Alberta’s Employment Legislation

Alberta’s employment laws are governed in part by the Employment Standards Code and the Labour Relations Code.

The Employment Standards Code covers various topics, including compensation, parental leave, compassionate care leave, and time off for family responsibilities. It also sets out the notice period that an employer must provide for termination of employment and the required procedure in case of layoff.

The Labour Relations Code governs the relationship between employers and unions. It sets out the process for union certification, collective bargaining, and the resolution of labour disputes. The agreements made under this legislation between the employer and a union typically govern termination and layoff rights for the employee.

It’s important to note that the rights and obligations of employers and employees in Alberta are subject to additional laws and legislation, such as the Alberta Human Rights Act, which prohibits discrimination on the basis of protected grounds, including race, gender, and sexual orientation.

Legal Rights of Employees for Termination and Layoff

The following sections summarize the minimum legal requirements for employers in the event of termination or layoff:

Written Notice of Termination

Employers are required to provide notice to employees in the event of a layoff, as outlined in Division 8 of the Employment Standards Code. The amount of notice required depends on the length of the employee’s service with the company. The following table summarizes the length of notice required under the legislation:

However, the legislation lays out exceptions to this general requirement. For example, a termination notice is not required in every situation, such as:

• The employee is being terminated for just cause;
• The employee has been employed for 90 days or less;
• The employee is on a fixed-term contract for a period not exceeding 12 months, which is ending;
• The employee is laid off after refusing an offer by the employer of reasonable alternative work; and
• The employment relationship ends as a result of a temporary layoff (more on this below).

The exhaustive list of exceptions is provided by s.55(2) of the Employment Standards Code.

Termination Pay

If an employee is entitled to termination notice, the employer may elect to provide termination pay instead. The amount of termination pay depends on the length of employment and matches the notice requirement outlined above. In other words, for employees with more than 90 days but less than two years of service, one week’s notice or pay in lieu of notice is required. And for employees with more than two years of service, two weeks’ notice or pay in lieu of notice is required for each complete year of service.

The employer may also give a combination of a termination notice and termination pay, where the termination pay must be equal to the wages of the employee for the period of time not covered by the notice.

The issue of termination pay has been highly litigated in Alberta’s courts. Recent cases have identified that verbal agreements can be valid, and the Alberta Court of King’s Bench is willing to support up to 24 months of pay in lieu of notice in special circumstances.

Layoff and Recall

As mentioned above, the employer is not subject to the typical termination rules when temporarily laying off an employee. Employers are not required to provide notice of termination or pay in lieu of notice. However, the employer must provide the employee with written notice of the layoff. The notice must include the effective date, the duration of the layoff, and the conditions under which the employee may be recalled to work. If an employer lays off an employee for more than 90 days within a 120-day period, the employer is considered to have terminated the employee. In this case, the employee is entitled to severance pay and any earned but unpaid wages. This stipulation is subject to whether there is an agreement in place for wage and benefit payments and whether there is a collective agreement binding the employer and employee.

When an employee is recalled to work, the employer must give the employee written notice at least seven days before the recall date. If the employer fails to recall the employee, the employee is entitled to severance pay and any earned but unpaid wages. If the employee does not return to work within seven days of being served the recall notice, the employee is not entitled to receive a termination notice or pay.

Employers considering temporary layoffs or employees that have received a temporary layoff notice should seek legal advice to fully understand their rights and obligations, as a temporary layoff may constitute a constructive dismissal entitling an employee to pay in lieu of notice in certain circumstances.

d) Collective Bargaining Agreements

Employers should also be aware of their obligations under the Labour Relations Code if their employees are unionized. The layoff and recall requirements outlined in the agreement may be greater than the province’s legislation. In such cases, the notice period, pay and benefits, and recall procedure will be defined by the terms of the collective agreement.

Constructive Dismissal

In addition to the above, employers and employees must be aware of the law regarding constructive dismissal. Constructive dismissal occurs when an employer changes an employee’s employment conditions that are so significant that the employee is forced to quit. This can include changes to pay, hours, duties, or the work environment. Employees who feel they have been constructively dismissed can file a complaint with the Alberta Employment Standards or a wrongful dismissal claim. The employee must prove that the changes were a breach of the employment contract or significantly altered an essential term of the employment contract. The employee may be entitled to compensation if their complaint or claim is successful.

The recent case of Kosteckyj v Paramount Resources Ltd concerned the time required to claim constructive dismissal. The Alberta Court of Appeal found that the employer did not constructively dismiss the employee due to the employee’s lack of complaint or protest by resignation within a 25-day period after a unilateral reduction of pay. The case suggests that the timeframe to complain of a constructive dismissal has been shortened.

DBB Law Provides Trusted Employment & Labour Law Advice in Alberta

Located in Calgary, Dunphy Best Blocksom LLP is trusted by unionized and non-unionized businesses and workers to provide effective employment and labour advice. Our team of employment and labour lawyers offers comprehensive support to clients in labour disputes.

DBB Law also provides top-tier legal services in a full range of practice areas, including family law, business and commercial law, civil litigation, construction law, real estate and property, tax law, and wills, estates, and trusts. To schedule a confidential consultation with a lawyer, call 403-265-7777 or reach out online.