COVID-19: Workplace audits & shock liabilities

Employers need to address gaps, adapt policies to the new normal — before the second wave

COVID-19: Workplace audits & shock liabilities

While it goes without saying employers’ immediate and primary focus is on the resumption and recovery of business operations, a workplace audit of existing contracts and policies is a crucial tool in identifying any deficiencies — and before the predicted second wave of COVID-19 causes more nation-wide shutdowns, organizations need to address these gaps.

“We can’t emphasize enough how important it is for employers to take lessons from this experience and take action now to prepare for future disruption,” says Amanda Nash, management-side labour and employment lawyer at McInnes Cooper.

Clients contact us once there’s already a problem, and lessons have been learned the hard way. A workplace audit is a way to identify gaps on a proactive basis before it becomes an issue and reduce any liability that might be associated with them.”

She says the most notable gap is “how seriously under-utilized employment contracts are — they’re an employers’ saving grace.” The most common issues are employers using an old template they’ve recycled over and over that’s no longer applicable, or one provided by a lawyer in the past that they altered slightly “only to realize later — and too late — that the minor change created a major liability,” Nash says.

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The gap is not pandemic specific, but in light of COVID-19 forcing employers to make decisions that wouldn’t have been advised pre-pandemic because of the risk — such as mass layoffs, permanent reductions to workforces and pay cuts for remaining or returning employees — as it currently stands many employers in Canada have tremendous liability exposure, especially with those employees they don’t recall.

If an un-recalled employee claims wrongful dismissal, in determining what they’re owed the court would look at the employee’s position, age, length of service and the likely amount of time it would take them to find alternate reasonable employment — a timeline that’s obviously going to be impacted by COVID-19, Nash notes. She suspects judges would extend the notice period employees are entitled to, possibly months and months as opposed to mere weeks under the statutory obligations.”

A lot of employers seem to think if they don’t have a solid employment contract, statutory minimums apply. Nash says while they absolutely do, and providing them prevents a complaint through the statutory complaint and appeal process, “nothing in the labour standards or employment standards legislation prevents the employee from taking civil action against the employer for the much longer reasonable notice period."

A good employment contract would specify that upon termination, what the employee is owed would be limited to what’s in the applicable provincial or federal labour standard acts, to the exclusion of all other claims for the greater amounts they could be entitled to in a civil action.

Nash advises employers the risk is probably lower right now because people don’t want to burn any bridges given the limited opportunities for work in the current climate — but “that’s not to say after a period of time they may not come after the employer for any obligations owed or believed to be owed to them.”

So far nothing has made its way through the justice system, likely because courts are operating at reduced capacity, but some jurisdictions have also extended limitation periods “so the clock isn’t running necessarily on the claims. Employers need to be aware the window isn’t closing.”

“To the extent employers can manage their liability on a go-forward basis knowing what we know now — we would always encourage it but now it’s an absolute necessity that employers take this into consideration,” Nash says. We can’t say this is a once in a lifetime thing and think lightning can’t strike twice because it’s quite possible it can.”

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While valid and enforceable employment contracts for new hires are a must, some employers are considering “a little bit more of a complex scenario” with existing employees by taking the opportunity provided by recalls and restructuring to implement new employment contracts. Legally there has to be “fresh consideration” such as a signing bonus or pay increase in exchange for employees altering their rights, and even though money is tight right now it might be worth the investment, Nash advises. To mitigate the cost, employers could take into account which employees pose the biggest liability risk due to their existing contracts or which positions are most likely to become redundant down the road.

“It may be in employers’ interest if we’re talking about a second wave of the pandemic where may have to do mass lay offs again, and their ability to recover may not be as robust,” Nash says. “More employees in the future may not be recalled and the liability employers have may be realized at that time.”

Not only does a workplace audit look at an organization’s employment contracts, it goes through a number of important headings to make sure a policy exists, includes the requisite provisions, is up to date with any recent changes in the law and aligns with the new normal.

Many employers are keeping at least some of their workforce remote, and while acceptable use and security policies for company-issued equipment and confidentiality agreements are important with the shift to home offices, “there are a lot of other things to be concerned about that will come to fruition” down the road, Nash says. For example, occupational health and safety issues — is the home set up ergonomically? Does the employee have the appropriate power bar? Is there a fire extinguisher? Are there trip hazards?

“We can certainly foresee there will be workplace injuries that employers have less ability to control when the hazards are in an individual’s home, but if they arise in the course of employment they likely would be under the employer’s duty to consider,” Nash says. “Those are real concerns.”

Because there haven’t been complaints yet, likely because employees haven’t been home long enough for injuries to be realized or for complaints to work themselves through the system, it’s difficult to predict how they’re going to be interpreted by the courts “but we can certainly expect and employers should certainly anticipate they could be liable for injuries that occur in the course of employment while at home,” Nash says.

Although a lot depends on the nature of the business, number of employees, how the workplace was set up before and if the employer is in a position to provide things like ergonomic adjustments, it’s generally a good idea for employer occupational health and safety committees to do a risk assessment — it can’t hurt to determine where the risks lie and what can be done to reduce them.

As a self-professed back-to-basics kind of girl, Nash often tells clients how easy it is to “get caught up in the hustle and bustle of emerging trends in HR” whether that be social media policies, post-legalization drug and alcohol policies or #MeToo era harassment policies. While those are necessary and important, “they do not delineate or reduce the importance of the simple stuff that’s so easily overlooked it can get us in trouble,” she warns.

“Organizations have to take a step back and start with a workplace audit — whether with an employment law firm or by sitting down in-house — and revisit these things starting from the bottom, not the top.”

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