Sep 21, 2020  By John Hyde

Bank Employees Told to Stay Home Until 2021 Could be in for a Rude Awakening

Employees of major Canadian banks should not expect to return to the office anytime soon.  Royal Bank, TD and the Bank of Nova Scotia have recently announced that most GTA based employees will not return to their offices until 2021. Others have followed suit.

For employees who had flex-work arrangements prior to the pandemic, it will continue to be ‘business as usual’. Many who had no such arrangement are nevertheless thrilled to avoid the downtown commute and spend more time with their families.

Yet, others who accepted their jobs on the basis that they would have a place to go everyday, may not be as thrilled to spend another six months or longer, taking Zoom calls from their bedroom, while their partner occupies the main office/living room. Some legal commentators have suggested that this type of a change amounts to a “constructive dismissal.” The argument is that, by unilaterally changing an essential term of the employment agreement (i.e. location of work), the bank has effectively dismissed these employees, thus entitling them to a severance package.

While this may be a good argument in theory, there are a few reasons why disgruntled, at-home employees should not expect such an argument to be successful.  

First, most employees have acceded to the change in their work location. At the height of the pandemic, when thousands were being fired or had their wages cut, very few employees would have had the gall to complain to their employers about working from home. Accordingly, work-from-home has likely become a term of employment for many.

More importantly, the decision to keep employees at home has been at the express direction of elected officials in order to prevent overcrowding in Bay Street offices and elevators. The decision is also in compliance with the Banks’ obligations under the Canada Labour Code to keep workplaces safe.  For these reasons, such arguments are not likely to carry much weight with decision makers.

However, the most pressing concern Bank employees will be confronting will be whether they have work at all.  

For banks which temporarily laid off non-unionized employees during the pandemic, many will have to recall those employees to work by the end of the year, or those employees will be deemed terminated under the Canada Labour Code. Many of those employees will not have enforceable employment contracts and will therefore be entitled to severance packages which far exceed their minimum entitlements under the Canada Labour Code.  Employees who have spent the majority of their working careers at the Bank could be entitled to up to 24 months’ worth of pay. The prospect of expensive terminations may cause banks to part with less senior, less expensive employees instead.

In response to COVID-19, the federal government has amended the regulations regarding when a temporary layoff automatically becomes a termination under the Canada Labour Code. Prior to the amendments, the Canada Labour Standards Regulations provided that a temporary layoff would not be deemed a termination in certain circumstances, including where: a) the layoff was for less than three months or b) where the term of the layoff was for six months or less and the employer notified the employee in writing of the date or period within which they would be recalled to work.

Following the amendments, the period of three months or less has been extended by:

  • six months for employees laid off prior to March 31, 2020, and
  • to December 30, 2020 for employees laid off between the period of March 31, 2020 and September 30, 2020.
  • Meanwhile, the fixed date or fixed period in the written notice (i.e., for up to 6 months) is extended by:
  • six months or until December 30, 2020, whichever occurs first, for employees laid off prior to March 31, 2020; and
  • to December 30, 2020 for employees laid off between the period of March 31, 2020 and September 30, 2020, and where the fixed date or fixed period specified in the written notice occurs before December 30, 2020. If the fixed date or fixed period specified in the written notice occurs on or after December 30, employers will have until that date to recall their employees

Then, there is the question of “continuance of job function”. Employees who have weathered the work-from-home storm or, whose roles are most conducive to remote arrangements, may be left unscathed. Others may simply have no job left for them to perform. Indeed, that is one of the requirements when terminating a non-unionized bank employee. Unlike provincially regulated employers, banks cannot simply terminate a non-managerial employee (i.e., person with no right to hire and fire or make unilateral decisions of importance) without cause; they must be able to prove that the employee’s job no longer exists. This also raises an important point. Just because the employee has the title of “manager” or “leader”, it does not necessarily mean that the employee loses the benefit of an unjust dismissal claim under the Canada Labour Code.

Bank employees who have been terminated during the pandemic, either expressly, or through the bank’s failure to recall them from their temporary layoffs within the required period of time, would be wise to scrutinize the reasons for the dismissal. In fact, as the headline in the Globe & Mail reported only last week, “Canadian banks return to focus on cost controls, resume paused job cuts”. There are several recent cases on this precise issue which speak to an employee’s entitlements and remedies in these situations.  Employees will want to ensure these cases are reviewed closely with experienced employment counsel.

For banks considering any alteration or reduction of their workforce in response to COVID-19, it is as important as ever to strategize the most cost-effective and legally permissible way to do so.  The Canada Labour Code is rife with robust statutory remedies for aggrieved employees, including reinstatement and back pay. The federal government will investigate and pursue these claims at no cost to employees, who need not retain counsel. Even if employees’ claims are non-meritorious, there are no cost consequences for pursuing these statutory remedies.  For employees, the barriers to entry are low by design, and the incentives to file their claims are high if they feel wronged. As such, it is critical that banks get these decisions right on the front end.

Banks, like many industries, will continue to make decisions about their workforce that are responsive to the economy, as well as health and safety regulations. Affected employees, and the financial institutions they work for, are wise to carefully consider the legal ramifications of their decision-making, as they navigate through these uncertain times.

Do you have questions? Contact the employment law experts at Hyde HR Law.

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