Employment Rights and Recession – Info Albertans Should Know

Learn What Your Employment Rights Are Before a Recession

As Canada approaches challenging economic times and the threat of a recession, the accompanying threat of layoffs in workplaces across Alberta becomes ever more likely.

For employees, understanding their employment rights is essential.

Here, we examine the relevant legislation that governs both employer and employee rights in Alberta and consider how a recession affects your right to severance pay if you are terminated.

Employment legislation in Alberta

The three most significant pieces of legislation for Alberta employers and employees are:

• The Employment Standards Code: this covers compensation, parental leave, time off for family responsibilities and the rules for termination (notice periods, severance and required procedure) for non-unionized employees.
• The Labour Relations Code: this covers the relationship between employers and unions, including union certification, collective bargaining and resolving labour disputes, as well as termination and layoff rights for employees.
• The Alberta Human Rights Act: this covers an employee’s right to be free of discrimination in the workplace based on protected grounds, such as race, gender and sexual orientation.

What are an employee’s legal rights for termination and layoff?

Let’s consider the basic legal rights of non-unionized employees under the Employment Standards Code (ESC), which details the minimum standards required of employers in Alberta.

Written notice of termination during a recession

Employees are entitled to notice in the event of a termination. The minimum notice period depends on the length of service and can be summarized as follows:

• Between 90 days and two years of service: 1 week’s notice
• 2 years to 4 years of service: 2 weeks’ notice
• After 4 to 6 years of service: 4 weeks’ notice
• After 6 to 8 years of service: 5 weeks’ notice
• After 8 to 10 years of service: 6 weeks’ notice
• After 10 years or more: 8 weeks of notice

According to the ESC, a termination notice is not required if:

• You are terminated for just cause
• You have been employed for 90 days or less
• You are employed on a fixed-term contract for less than 12 months (which is ending)
• You are terminated after refusing an offer of reasonable alternative work from your employer
• You are temporarily laid off

Termination pay (severance) due to a recession

If an employee is entitled to notice of termination, the employer can choose to provide severance pay in lieu of notice. This means that a minimum severance must be paid depending on the length of employment and matching the length of the notice period outlined above.

So, an employee who is terminated after 18 months with the company would be entitled to one week’s notice or pay in lieu of notice. The employer could combine notice and termination pay, but the termination pay must be equal to the wages of the employee for the period not covered by the notice.

This applies regardless of whether the layoff is due to a recession or another reason that is no fault of the employee’s — and it generally applies even if there is no formally written employment contract.

If an employer wants to terminate an employee on the spot, severance may be offered. However, employees should bear in mind that even if the minimum termination pay requirements are met under the ESC, they may be entitled to more under common law.

Temporary layoff and recall during a recession

An employer in Alberta can temporarily lay off an employee during a recession. In these circumstances, the standard rules for termination do not apply, and no severance pay is necessary, but notice of the layoff must be provided at least seven days before the effective date.

The written notice should include:

• The effective date
• The duration of the layoff
• The conditions under which the employee may be recalled to work

If you are laid off for more than 90 days within a 120-day period, your employment contract ends. Non-unionized employees are then entitled to severance pay plus any earned but unpaid wages.

If you fail to return to work after being recalled, you waive the right to termination notice and severance.

Constructive dismissals due to a change in employment conditions

Temporary layoffs sometimes constitute constructive dismissals, so it’s important to understand your employment rights in this respect.

Constructive dismissal is a type of wrongful dismissal in which an employer unilaterally and significantly changes the terms of employment, leaving an employee with no option but to resign.

Significant changes might include changes to working hours, pay, job title or the work environment.

This sometimes happens when an employee is recalled after a temporary layoff but it can occur at any time in the employment relationship. It is, perhaps., more likely during a recession when employers are looking to cut costs.

Constructive dismissal cases can be complex, and it is best to seek legal advice from a qualified employment lawyer before you resign or agree to any proposed changes from your employer. You may be entitled to significant compensation but must act promptly if you have been constructively dismissed.

Are you entitled to severance pay in a recession?

Your right to receive severance pay is not affected by economic conditions, so even during a recession, you are entitled to severance.

How does a recession affect severance?

If you are fired during a recession, you may be entitled to higher compensation because of the difficulty of finding alternative employment.

Under common law, factors besides the length of service, such as age and the job market, are taken into account when awarding severance pay. If work becomes hard to find, you may be entitled to a higher award than your employer provides.

Often, an employer simply pays the minimum under the Employment Standards Code, but you may be able to claim more.

Starting a new job during a recession? Review your employment contract…

If you’re starting a new job during a recession, it’s best to have your employment contract reviewed to ensure that it’s in your best interests to sign it.

For instance, a clause that allows your employer to make significant changes to your job may harm a future constructive dismissal claim.

If you have any questions about your legal rights as an employee, an employment lawyer from Taylor Janis LLP in Vancouver can advise you during an initial, confidential telephone or video consultation.

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• Details are sourced from trusted legal sources like the Employment Standards Code.
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