Update and status report for Quebec employers: What to do if COVID-19 results in a business interruption?

A few hours ago, we published a Legal update answering the questions most frequently asked by employers in Québec.

Since then, the situation has been evolving at a brisk pace. The closing of both public and private establishments has multiplied, reminding us of the importance of having a structured business continuity plan in place. But what can be done when a business interruption, even a temporary one, must be considered?

This situation may unfortunately become a reality for some organizations, which may have to, for instance, deploy medical prevention measures or find that they are unable to stay open due to a high absenteeism rate.

Due to this exceptional situation, we believe that employers may be able to temporarily lay off employees without pay under the circumstances.

In such a scenario, the following elements should be taken into consideration:

• For unionized employees, we believe that this situation is a case of superior force that might justify proceeding with layoffs without pay or notice despite provisions to the contrary in any collective agreement, provided that (i) such a decision is based on serious and documented grounds, and (ii) measures are taken to limit the length of these layoffs. On that note, very interesting parallels can be drawn between this case and the ice storm crisis,¹ among others, where a decision was made addressing these very principles and where an employer’s decision to proceed with layoffs despite the provisions of a collective agreement in that context was upheld; 
• For non-unionized employees, the Act respecting labour standards (for a maximum period of six months) and the Canada Labour Code (for a maximum period of three to six months, depending on the case) authorize such lay-offs without pay or prior notice;
• As to whether or not a temporary layoff constitutes a constructive dismissal within the meaning of the Civil Code of Québec (and could therefore give rise to a claim for indemnity in lieu of notice), case law on the subject might, at first glance, appear to be contradictory.² In the case of a pandemic and superior force, we believe that a person who is temporarily laid off cannot consider that layoff to be a substantial modification of his or her working conditions. We therefore believe that an employer would be justified in proceeding with temporary layoffs in such a context;
• Note that in the rare cases where a collective agreement or employment contract contains a true obligation of warranty, the unions and  employees may challenge a superior force defence. It is important to have the wording of the collective agreements and employment contracts, as well as the circumstances of the contractual relationship, analyzed by your legal advisors.

Obviously, such a decision will not be without consequences for employees and businesses alike, which is why we would like to make a few recommendations should such a course of action become necessary:

• Implement a communication plan that openly explains to your employees and their union representatives (where applicable) the reasons for your decision and stresses that the measure is a temporary one;
• Inform employees quickly and efficiently of the relief measures available (such as employment insurance) and, once these are specified, the conditions for receiving assistance from the government. Note that Premier François Legault promised to deploy support measures for Quebec employees and businesses struggling with the consequences of this situation;
• Redirect all of your employees who have been affected by such a measure to employment insurance. Issue the record of employment of the employees rapidly and be sure to indicate that the layoff is a temporary measure caused by a reduction in workload due to COVID-19;
• Establish a business recovery and employee recall plan in advance so that you can efficiently relaunch your activities in compliance with the provisions of the collective agreement, where applicable;