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An update to our clients about COVID-19 Learn More

Good News for Employees in an Economic Downturn

Enough with the bad news already! We’re pleased to bring you some good news for employees in an economic downturn. Yes, there is actually a silver lining during this time of turmoil. We want to show you how the Government of Alberta favours employees in the midst of a poor economy.

How an Economic Downturn Impacts Employees

Calgary Employment LawyersThe COVID-19 crisis has impacted Canadians in life-changing ways. A big part of that has been the massive hit to our economy. In May 2020, Canada’s unemployment rate reached a record high of 13.7%. Millions of Canadians lost their jobs without hope of finding a new one anytime soon.

Unemployment is an uncomfortable side effect of an economic downturn. It’s a vicious cycle:

…People spend less, which means

…Businesses sell less, which means

…Businesses don’t need as many employees, which leads to

…Employee terminations, which leads to

…People spending less.

And so the cycle continues. It’s a bit depressing.

In Alberta, the Employment Standards Code governs job loss. The good news is that the Government of Alberta has put laws in place to protect employees no matter what the economy looks like, but especially in an economic downturn.

How to Determine the Required Termination Notice Period

By law, employers are required to give employees reasonable notice of termination or pay in lieu. This means that employees must be notified in advance of their termination or, if the termination is effective immediately, employers are required to pay the employee the amount they would earn if they worked during the termination notice period.

The required length of the notice period is determined by several factors including:

  • How long you worked for the employer,
  • What position you held during your employment,
  • Your salary or wage, and
  • The current market to find a new job in the same field. (In other words, the current state of the economy.)

For a full description of reasonable notice time periods, see Employment Termination & Wrongful Dismissal: What You Need to Know.

Factors to Determine Termination & Severance Pay

Alberta law also addresses the pay an employee is entitled to upon termination. Many factors contribute to the calculation of termination pay and severance pay including:

  • The cause of your employment,
  • The length of your employment,
  • The position you held during your employment,
  • Your salary or wage, and
  • The current market to find a new job in the same field. (In other words, the current state of the economy.)

For a full explanation of how much termination pay and severance pay you are entitled to, see What Am I Entitled To During the Termination Notice Period?.

Impact of the Economy on Termination Notice Period & Pay

As you can see, the law takes into account the current economic state to determine the rights of employees. There is an understanding that changes in the economy impact an employee’s ability to find a new job after termination.

What does this look like practically? How are these laws upheld and enforced in the day-to-day lives of Alberta’s workforce?

Because the Courts evaluate each case according to so many unique factors, it can be difficult to predict the ruling on a wrongful termination claim. However, the recent changes to Alberta legislation provides hopeful evidence of favouring the employee during an economic downturn.

On April 6, 2020, a Ministerial Order was issued to extend the temporary lay-off period from 60 days to 120 days. This benefited employees by allowing them to keep their jobs even though employers were not in a position to recall employees due to COVID-19’s impact on the economy.

On June 26, 2020, Bill 24: the COVID-19 Pandemic Response Statutes Amendments Act, 2020 further extended temporary layoff provisions to 180 days. For more details on these changes, see COVID-19 Temporary Layoff Period Extension & What it Means for You.

These extensions allow more time for an employer to recover and recall employees, or for employees to find alternative employment. The Government has taken into account the monumental shift in Canada’s economy and has provided safeguards for Canadian employees impacted by the economic downturn.

Are You Getting What You’re Entitled To?

If your employment has been terminated due to COVID-19, the law protects your rights. You have a right to a reasonable notice period and to a minimum amount of termination pay and possibly severance pay.

There are laws that dictate what the length of your notice period should be and how much pay you’re entitled to. Because there are provisions in the law acknowledging the impact of the economy on your ability to find new employment, you might be entitled to more than you think.

Have a Calgary employment lawyer review your case before signing any release contracts or severance packages. At Osuji & Smith Lawyers – Calgary Employment and Business Lawyers, we believe the law protects employee rights in an economic downturn. 

We’re committed to helping you get what you’re entitled to.

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