COVID-19 SAGA: WHAT EMPLOYERS SHOULD KNOW ABOUT STATUTORY NOTICE EXEMPTIONS & DOCTRINE OF FRAUSTRATION.

The COVID-19 pandemic brings a wave of economic uncertainty for businesses all over the world. From the largest corporations to the small business enterprises, no one is exempt from the sudden unprecedented living reality. As the people of Alberta struggle to adjust in these trying times, there is no denying the consequences for business organizations and their employees.

While organizations switch to work remotely as a control measure, what becomes of business models that do not support working remotely? In this case, we refer to organizations that are involved in the supply of labour for example, where core business performance is threatened by risk of sudden operation shut down due to employees observing social isolation measures or the provincial government shutting down non-essential businesses. Employers may become unable to fulfil their obligations under contracts as labour becomes unavailable. More so, employees will face even graver impacts from halted employments and/or in worst cases, termination.

Regardless of government response to accommodate on provincial and national fronts, one of many questions asked in this situation is to what extent if any, are the employees still entitled to the ordinary statutory notices or pay in lieu under the Employment Standards Code (“ESC”).

Section 58 (2) of ESC establishes statutory exemptions to the usual rights of employees to receive either written notice or pay in lieu of notice. The section allows employers’ exemption where an employee is employed under an employment contract that is impossible to perform due to an unforeseeable event or circumstance.

The exemption however, like the common law doctrine of frustration, is not automatic. The employer has the burden of demonstrating that the event makes it both impossible to perform the employment and that the impossibility of the performance was due to an unforeseeable circumstance – such as an “Act of God”. Act of God simply means an extraordinary occurrence which could not have been foreseen and could not be reasonably anticipated.

Given the unprecedented nature of events, it is believed the COVID-19 sits well within the definition of an ‘Act of God’. However, since not all business organizations can operate remotely and need to make difficult choices to downsize workforce or rescind on contractual obligations in order to stay afloat, it is necessary that employers obtain a legal counsel to consider their circumstances and how the exemption applies to them.

Please contact Osuji & Smith for guidance as we navigate through these uncertain times.

Author: Calisa Nwaiwu

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