/Howard Levitt: Employers are using the pandemic to rewrite employee contracts
Howard Levitt: Employers are using the pandemic to rewrite employee contracts

Howard Levitt: Employers are using the pandemic to rewrite employee contracts

Facebook Inc.’s announcement that it will allow employees to work from home but, if they move out of California, will see reduced pay based upon the cost of living in their new locations, has employees’ tongues wagging and employers positively salivating.
Employees, working from home, are asking whether they can demand compensation from their employers for the equipment they purchased to outfit their homes, while company clients are seeking to reduce employees’ salaries because of lower commuting costs. Many are seeking to benefit from the crisis.
Some Canadian legal prognosticators have publicly stated that employers can reduce the salaries of employees who choose to work in a less expensive location as their lower cost of living will leave them in the same position financially. That legal advice is simply wrong.
Employers can provide employees a choice between working from their office at full remuneration or working from home and receive a negotiated lower salary.
The difference is that the employee retains the option of working from the office without any reduction so that the lower salary option is the employee’s decision.
A basic principle of employment law is that an employer can never reduce an employee’s earnings without their consent, unless they provide them, generally, months of advance notice.
The only Canadian case regarding working from home involved Dean Ernst, employed by Destiny Software Productions. Ernst had been hired in Calgary on the basis that he could work from home for a short time before his transfer to Vancouver.
While ‘working from home,’ Ernst decided to move to Cabos San Lucas, Mexico. Destiny demanded he return to Calgary.
Ernst refused and was fired. The court said that the parties had a clear understanding that Ernst would remain in the Calgary area until he moved to Vancouver. His refusal to return from Mexico was cause for his discharge without severance.
There are other legal issues with working from home. Other than in a pandemic where offices are ordered closed, telling employees who have always worked in the office that they must work remotely is a constructive dismissal, as is requiring employees who have always worked from home to start coming into the office.
That’s why employers should have employment contracts permitting them to change employees’ location after some specified notice. Employers should also include other matters such as work hours, response time and supervision in the contract.
Changing the pay of employees working from home is only one of the changes we are now seeing from coast to coast.
Employees are being asked to return from layoffs at reduced or different positions, at lower salaries and at reduced hours of work.
Other employees, who accepted reductions in wages or hours, are finding that change is permanent or, in some cases, not entirely restored. If wage reductions exceed 16 per cent, that’s also deemed a constructive dismissal, according to the Ontario Superior Court in a decision in which I successfully acted for Larry Doran against Ontario Power Generation Inc.

Employees are being asked to return from layoffs at reduced or different positions, at lower salaries and at reduced hours of work

When an employer lays off staff or reduces their wages or hours, employees should specify a duration beyond which it will not be accepted. If they work on the new terms without setting any time period, it will be considered accepted and the previous arrangements need never be restored.
Even if they are restored, employees who accept these changes, often out of loyalty to their employers, find themselves with less legal rights going forward since employers can make similar changes to their hours or wages, or introduce another layoff in the future without triggering a constructive dismissal.
Employers are also asking employees, upon their return to work, to sign employment contracts which permits them to lay them off, reduce their wages and terminate them going forward with limited severance, relying upon the economic desperation on the employee’s part.
Employees need not sign such contracts and, if the employer dismisses them because they will not, it is a wrongful dismissal. Such agreements are not enforceable unless the employee is provided something new in return, which is called consideration.
The upshot of this creative chaos is that many employers, whether due to economic difficulty, opportunity or newfound legal rights, are using the pandemic to change employees’ terms of employment on a permanent basis.
And now on to the questions I received recently.
Q: The retail store I work for has called me and another employee back as it opens up again, for 34 hours a week at minimum wage. Employees who have been called back on a part-time basis are still collecting the Canada Emergence Response Benefit, and are therefore, earning more than I am. Can I only accept enough hours to earn less than $1,000 per month, so I can keep collecting CERB?
A: No. If you are called back to your former hours of work, you cannot insist upon working fewer hours. If you refuse your former shifts, your employer can terminate you for abandonment and you will neither have a job nor CERB benefits.
Q: I left my job and started my own business but I am making virtually nothing. Can I collect CERB?
A: No, to collect CERB you have to lose your job or have your income reduced because of COVID-19. That’s not your circumstance.
Q: My daughter’s company called for a COVID-19 safety inspection. The inspector did not attend in person but went over things only by phone. Is that safe? What can employees do?
A: Some of the inspections have been conducted by phone and the decision is still binding. Your daughter should speak to the inspector and explain her concerns so they can consider attending the workplace.
Got a question about employment law during COVID-19? Write to me at levitt@levittllp.com.
Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers. He practises employment law in eight provinces. He is the author of six books including the Law of Dismissal in Canada.
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