Brody Sikstrom has been called to the Bar

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Walsh LLP is beyond proud of our newest Associate, Brody Sikstrom.

Today, Brody was called to the Bar, experiencing one of the proudest moments in the life of a lawyer. We thank you Brody for your dedication to Walsh and the years you have already provided to Walsh as both a Summer Student, Articling Student and now as an Associate. It has been a pleasure for all of us here at Walsh to watch you grow into the amazing person and lawyer you are today. We look forward to many more years of success together and wish you nothing but the best. Congratulations on your admission to the Bar Brody!

YOU DID IT!

An Employer’s Guide to Bill 32: Restoring Balance in Alberta’s Workplace Act

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An Employer’s Guide to Bill 32

The Alberta Government’s new Bill 32: Restoring Balance in Alberta’s Workplace Act proposes significant changes to both employment standards and labour relation laws in the province. The Bill was introduced on July 7, 2020 with the intention of providing clearer and more transparent rules, and reducing red tape for employers bringing employees back to work. It contains noteworthy changes to laws on termination and layoff restrictions, payroll deductions and pay calculations, youth employment, union dues and disclosure requirements, and strikes, lockouts and picketing.

As an employer, it is important to be mindful of these changes as, if passed, they will have a significant impact on your workplace. In an effort to prepare you for the proposed changes, we briefly highlight some key areas that will be affected.

Changes to Employment Standards

Hours of work: An hours of work averaging agreement (HWAA) allows employers to average an employee’s hours of work over a period of one to 12 weeks for the purpose of determining the employee’s entitlement to overtime pay or, instead of overtime pay, time off with pay. Under the proposed changes, an employer will be able to change or start an HWAA without an employee’s consent, provided they give the employee 2 weeks’ notice. The averaging period for an HWAA will increase from 12 to 52 weeks with the ability to request a further extension. With this change, an employer will still be required to ensure an employee receives 8 hours rest between shifts.

Additional changes include, an HWAA no longer requiring an end date, and more flexibility to employers to determine how and if daily overtime applies. Employers will not have to provide daily overtime, unless it is included as part of the HWAA. When included, daily overtime will be calculated based on the greater of weekly or daily overtime hours. A weekly overtime threshold will still apply regardless of whether daily overtime is included in the arrangement. Overtime must be paid out to the employee no later than 10 days after the pay period that the averaging period ends (which may be as long as 52 weeks).

Final pay upon termination: The Bill proposes extending the deadline for termination payments from the current obligation that an employer must pay a terminated employee no later than 3 or 10 days after the last day of employment depending on whether notice was required. The changes will no longer differentiate between termination of employment by employer or employee, or whether termination notice or pay was required. Instead, employers would be required to pay an employee within either, 10 consecutive days after the end of the pay period  in which termination occurred, or 31 consecutive days after the last day of employment. The choice will be up to the employer and can be made based on what would better align with their respective pay cycles.

Employer deductions: Employers will be allowed to correct payroll errors and recover vacation pay paid in advance without an employee’s written authorization to deduct the amount from their paycheck. Employers will still be required to notify employees prior to any other deduction.

Holiday pay & wage calculations: While employees are still entitled to general holiday pay, employers will no longer have to include vacation pay and general holiday pay in the average daily wage calculation. The employer can choose between two options on how an employee’s average daily wage is calculated, depending on which calculation period best aligns with their respective payroll cycle. The calculation can either be the total wages averaged over the number of days they work in (a) the four weeks immediately before the general holiday, or (b) the four weeks ending on the last day of the pay period that occurred just before the general holiday.

Layoffs: Employers will be able to lay off employees for a longer period of time, increasing the time from 60 to 90 days within a 120 day period. Note that COVID-19 related layoffs are a separate issue and will continue to be up to 180 consecutive days.

Rest periods: Employers will be required to provide at least 30 minutes of rest every 5 hours for shifts that are longer than 5 hours. The rest period can be within or immediately after the 5 hours of work, or at any time mutually agreed upon by the employer and employee.

Group Termination Rules: There will no longer be different rules for terminations depending on the number of staff being terminated. The Bill proposes one set of rules for all terminations of 50 or more employees in a four-week period. Employers will still be required to give the Minister 4 weeks’ notice, or as much time as is reasonable when they terminate more than 50 employees at a single location.

Youth in the Workplace: The list of jobs available to youth aged 13-14 years old will expand to include positions in the restaurant industry, light janitorial work, coaching and tutoring and will no longer require a permit, provided the youth workers are working with someone at least 18 years old.

Penalties: The Bill proposes a reduction on a case-by-case basis for administrative penalties imposed on employers that contravene employment standards and will give the employer more time to make the payment. It will also make it easier for employers to get approval for a variance or exemption to an employment standard.

Changes to Labour Relations

Alter Employment Standards Rules: Under an HWAA, employers and unions will be able to agree to alter employment standard rules for hours of work, notice of work times, days of rest, and overtime hours.

Certification & Revocation Timelines: Specific timelines for union certification and revocation processes will be removed and replaced with a more general rule that applications should be processed as soon as possible, no later than 6 months after the date of application. The legislation will also specify when remedial certification can be used, as in instances when no other remedy is sufficient to counteract the impacts of the employer’s misconduct and the true wishes of employees can’t be determined.

Collective Agreements: Employers and unions will be able to renew a collective agreement before it expires if employees give their informed consent. And, if employees choose a new union, the existing collective agreement would still apply until it expires.

Opt-in Portion of Union Dues: The proposed changes mandate greater transparency for union spending and give employees the ability to opt-in to pay the portion of union dues that may go towards funding political parties and causes.

Complaints: When a complaint is made against an employer about an employee being unfairly terminated, the employer will be responsible for proving they did nothing wrong. The same responsibility will be placed on unions in cases of alleged coercion or intimidation.

Strikes, Lockouts and Picketing: The proposed changes will require the immediate filing of a Labour Relations Board’s order on a strike, lockout or picketing, at the request of one of the parties. During an illegal strike the Board may order employers to suspend union dues. During an illegal lockout, they may also order employers to continue to pay employees’ union dues.

Additionally, there are stricter rules proposed for picketing. Picketing would be deemed wrongful when it obstructs or impedes a person from crossing a picket line. Unions would also be required to get approval from the Labour Relations Board before picketing somewhere other than the employer’s business.

Construction Sector Changes: The Bill introduces more flexible rules for construction unions to organize their members, in an effort to help reduce employers’ administrative work associated with unionized employees. Industrial unions will be able to form “all employee units” by representing all employees who work for the same employer, regardless of their trade. This change will not affect building trade unions who will continue to certify their members on a craft-by-craft basis and international unions who will still follow existing rules in provincial collective agreements.

Conclusion

The changes detailed above are only a highlight of the total changes proposed under Bill 32 and do not represent a comprehensive list. The team at Walsh LLP is experienced in all these matters and together we can help ensure your business practices are aligned with the new changes if or when they are approved.

Questions

If you have any questions, please do not hesitate to contact Walsh LLP and speak to one of the members of our employment law team.

How to Resolve Your Case During COVID-19

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Walsh LLP’s counsel discuss how to resolve your case, even during covid-19, through court-approved means outside of court. Mediation and Arbitration are tools available to have a meeting/hearing to solve the case. Please watch and follow up with any questions: +1 (403) 267-8400.

COVID-19 and Employment Law

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Virtually no employer is immune from the effects of Covid-19. Whether it is continued uncertainty, post-crisis recovery or re-opening for business, all employers must be informed of legal issues and obligations that may arise when dealing with employees.  In effort to be better prepared to mitigate risks and react quickly, we briefly discuss issues that all employers should be considering.

Re-Opening For Business

Employers must determine if it is legally permissible to reopen its doors, based on present government orders and restrictions, which will continue to evolve as Alberta continues to relax restrictions.  Care should be taken because breaching orders may result in fines, penalties and other adverse effects.

In conjunction with reopening for business, employers must use this time as an opportunity to update employment contracts as well as policies and procedures.

Foremost, employment contracts should be reviewed and updated, where necessary, to sufficiently address issues that COVID-19 caused to surface, such as temporary layoffs. Another significant consideration is whether or not your employment contracts have effective termination clauses or the express authority to changes to duties, compensation, and work location with defined notice requirements.

In terms of polices, some additional key considerations include adopting or updating work from home protocols and what that means in terms of security and privacy and the use of company tools, equipment, and computers. Revisions to travel polices may be required as well as clarity on whether or not various leaves of absences, such as sick leave, are paid or unpaid.  Policies will also need to be revised to reflect amendments made to various legislation as a result of Covid-19.

Layoff

A change to Alberta’s employment legislation extends an employer’s rights of temporary layoffs from 60 days to 120 days. Prior to layoffs, employers may wish to consider other statutory or personal leaves available to an employee.  Furthermore, layoffs require strict statutory compliance and must be carried out carefully.  The technical requirements of layoffs are not often discussed in the media and can provide employers a false sense of right or security.  For example, the legislative right to layoff does not necessarily provide a contractual right to layoff and may result in an unintentional termination of an employee where severance is owed.

For employers who have already conducted layoffs, the specific legislative guidelines regarding callback notices or options to continue the layoff status of its employees should be considered and reviewed.  Failure to adhere to legislative requirements may result in the deemed “termination” of employees, which result in catastrophic obligations in terms of exposure to paying large amounts of severances.

Human Rights

Covid-19 has not changed an employer’s obligation to accommodate employees beyond undue hardship.  In fact, the closure of schools and daycares in the province has caused the rarely used “family status” protection provided for in human rights legislation to surface to forefront of consideration.

In short, family status protection extends to an employee whose personal family obligations interfere with the ability to perform occupational duties. For example, it is discriminatory for an employer to refuse to allow an employee to work from home due to children care obligations.  Options should be explored, such as offering flexible work-schedules, using sick leaves, vacations and the prescribed job-protected leave to combat the uncertain time for short term relief.  Accommodation is a two-way street and the employee has a shared obligation to cooperate and act reasonably in terms of accommodation efforts and must exhaust all possible solutions before requesting a leave.

Workplace Health and Safety Obligations

Alberta occupational health and safety (“OHS”) legislation has always mandated employers take all reasonable and practicable measures to provide a healthy and safe working environment. COVID-19 presents a risk to the health and safety of workers and accordingly, employers must take reasonable steps to address this risk. What is appropriate and reasonable depends on the nature of the organization and the workforce and are reasonable steps today may not be reasonable tomorrow. Employer should ensure that they are following best practices by staying on-top of recommended safety protocols from our federal and provincial governments, the Public Health Agency of Canada and the Centre for Disease Control and others.

Some key considerations included limiting the number of employees, customers and clients in the workplace, encouraging social distancing in the office, lunchroom, waiting room, reception and elsewhere, ensuring all workplace hygiene and regularly sanitizing shared surfaces, preventing sick employees form being at work and implementing appropriate policies such as limiting non-essential travel, maintaining a list of names and contact details of people who attend the workplace to assist health authorities trace people exposed to Covid-19 and more.

Conclusion

The impact that Covid-19 has had on the legal landscape has and will continue to provide significant challenges to employers in Alberta. However, with careful thought and attention to the issues that may arise, it is possible to face these challenges, whether now or after the pandemic, in order to ensure that your business not only continues but thrives into the future. The team at Walsh LLP is experienced in all these matters and together we can help safeguard your business and make sure your obligations to your employees are met.

Questions

If you have any questions regarding the above please contact our office at 403-267-8400.

Pandemic Parenting: Covid-19 in the Alberta Family Law Courts

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If you are a parent, it is likely that you have had to make some adjustments during the Covid-19 pandemic.  Parents’ work schedules have changed, kids are no longer in school or daycare, and you now have to relearn and teach your children math equations you forgot back in 1992.

Spending time (being trapped) indoors with your wonderful (crazy) children is challenging enough; however, it is made easier by knowing that by self-isolating you are keeping your family safe and healthy.  Parents who are separated, divorced, or otherwise attempting to co-parent with a former partner do not always have that same comfort.  What do you do when you believe that your former partner is putting the children and others at risk of contracting Covid-19?

If you are in this situation, you are not alone.  Fortunately, the courts across Canada have been swift in addressing this issue.  Despite the fact that courts are refusing to hear non-urgent family law matters, a number of cases have been reported during the past two months which have addressed parenting in the time of Covid-19.

The first, and most frequently cited, is the Ontario case Ribero v. Wright 2020 ONSC 1829.  In Ribero, Justice Alex Pazaratz, sitting as triage judge, provided guidance on the court requirements from a parent attempting to bring an “urgent” parenting-related application, as well as the type of behavior that warrants the suspension or limitation of a parent’s time with the children.

This decision was recently adopted here in Alberta by the Honourable Justice Graesser in SAS v LMS, 2020 ABQB 287.  In this case, the parents had a shared parenting regime.  The mother suspected that the father was not following the appropriate procedures and was putting the children at risk of contracting Covid-19 during his time with them.  Her concerns were based in part on the children’s comments to her, as well as her conversations with the father, who admitted to attending his office, allowing a coworker to come to his house to drop off papers, and taking the children horseback riding.  The parents attempted to address the matter between themselves, but were unsuccessful, so the mother unilaterally withheld the children from the father.  The father then made an “urgent” application requesting that the mother be found in civil contempt and requiring her to adhere to the parties’ prior parenting order with a police enforcement clause.  In the alternative, he asked the court to order the children to live primarily with him during the pandemic.

Justice Graesser’s decision is a clearly written must-read for parents concerned about the other parent’s adherence to Covid-19 health and safety precautions.  In SAS, Justice Graesser states that as a precursor to an application to suspend or vary parenting, parents should make good faith attempts to resolve the issue between them. His Lordship goes on to say that if the concerns remain unresolved, a court application should be brought before a parent withholds the children from the other.  Despite a strong caution against these “self-help” remedies, Justice Graesser acknowledges that there may be exceptions when such actions might be warranted:

“One is where a parent is diagnosed with COVID-19 and insists on still exercising face to face access with a child. Another would be where a parent is displaying symptoms of COVID-19 but refuses to do anything about it. A third situation would be where a parent has or is about to do something involving the children that poses an immediate threat to their health or safety. In any of these cases, if there is no time to apply for permission to make an emergency application, unilateral action may be forgiven if an application is made at the earliest opportunity.”

After undergoing a detailed analysis of the evidence, Justice Graesser finds that the majority of the mother’s concerns were valid and that, despite correcting his behavior, the father continued to express a cavalier attitude towards the recommendations which suggested that he did not appreciate the associated risks.  However, his Lordship also found that, while the mother better appreciated the risks of Covid-19, she was somewhat hypocritical in failing to meet her own standards by allowing her healthcare worker partner to return to her home without self-isolating for the requisite 14 days.

His Lordship states that if parents are continuing to work during Covid-19 they must commit, at a minimum, to “scrupulous adherence to all AHS recommendations and requirements relating to the workplace.”  He clarifies that this applies to healthcare workers, but that just because a parent is, or lives with, a healthcare worker does not automatically make them a higher risk household.

Ultimately, Justice Graesser dismisses the father’s application but also admonishes the mother for failing to make an application before attempting her “self-help” remedy of withholding the children.  Had the mother been the applicant or made a cross-application instead of attempting the “self-help” remedy of retaining the children, the court’s strong, safety-first language implies that the outcome might have been different.

While the case as a whole is worth a read, overall, SAS suggests that a parent’s attitude towards AHS recommendations (and the other parent), may be just as decisive a factor as their actual adherence to these recommendations.

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Justice Graesser’s summary is below:

1. Parents are expected to address COVID-19 issues and concerns with each other before taking any action (including applying for variations or relief from the Court) to resolve these issues and concerns in good faith and to act reasonably in exploring strategies that will first and foremost ensure the health and safety of their children.
2. Where face to face access or parenting time presents different risks in the different households, the parties should consider strategies that have the children in the less risky environment but in a manner that maximizes virtual contact between the children and the other parent.
3. Court orders are meant to be followed. There should be no unilateral withholding of access or parenting time except in true emergency situations as described above where there is imminent risk to a child’s health or safety;
4. Whether under the Divorce Act or the Family Law Act, varying existing court orders requires a change in circumstances and will be determined on the basis of the best interests of the child or children. COVID-19 is not an automatic change in circumstances; the party seeking a variation must establish that their family circumstances have been impacted in a way that warrants a temporary change in the order;
5. The burden or onus of proof is on the parent seeking a change in the status quo or the existing court-ordered parenting. It is not satisfied by suspicion or speculation, but as with any matter involving circumstantial evidence, it may be satisfied by logical and reasonable inferences from conduct;
6. If an application cannot be made because of the urgency of the situation, an application by the defaulting party must be made as soon as possible after learning of the emergency;
7. Applications based on speculation, mistrust, or fear without credible evidence of material non-compliance posing unacceptable risks to the children are unlikely to get permission to proceed as an emergency application, let alone be successful; and
8. Respondents must be prepared to unequivocally commit that he or she will meticulously comply with all COVID-19 safety measures; and
9. Non-compliant parents can expect no second chances.

Covid-19 and Construction Projects

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Virtually no industry is immune from the effects of Covid-19. Owners, contractors and subcontractors all need to be aware of the issues and obligations that may arise and be prepared to deal with them. The below addresses some of the particular items you may need to turn your mind to protect your business and employees.

Essential Service

As of March 27, 2019 most types of construction projects in Alberta were deemed essential services. For example:

• Construction projects and services associated with the healthcare sector, including new facilities, expansions, renovations and conversion of spaces that could be repurposed for health care space;
• Construction projects and services required to ensure safe and reliable operations of critical provincial and municipal infrastructure, including transit, transportation, energy and justice sectors beyond day-to-day maintenance;
• Construction work and services, including demolition services, in the industrial, commercial, institutional and residential sectors;
• Construction work and services that supports health and safety environmental rehabilitation projects;
• Construction projects to repair or render operable / safe any public conveyance, including elevators, escalators and ski lifts;
• Construction projects and services that are required to ensure safe and reliable operations of critical energy infrastructure or support supply chains; and
• Any other construction project that can safely abide by the CMOH Public Health guidelines/directives.

Therefore, construction projects can continue so long as it meets the above list and complies with Health Guidelines.

OHS

Employers have a general duty under Occupational Health and Safety legislation to provide a safe work environment for workers. This can be complicated when dealing with the Public Health guidelines such as social distancing and the requirement to avoid having gatherings of more than 15 people. If a project is ongoing, employers must take necessary precautions and do all that is possible to protect its workers including cancelling large meetings, cleaning and disinfecting surfaces and providing masks when possible.

Delay

Whether a project is delayed and what remedies may be available is dependent on the precise wording of a Contract. Parties should review their contracts to understand their rights and obligations if a delay results from issues related to the pandemic. There are often explicit notice provisions for advising the other party of delay and if you miss those deadlines it may impact your ability to make a claim or rely on the cause for delay. For example supply issues because of Covid-19 may effect an ability to continue or complete work in timelines established in the Contract.

Some Contracts will also provide the Owner a specific right to suspend the Contract with or without penalty. Whether to utilize this provision will depend on numerous factors such as whether it is an essential service, the supply chain issues, and financial issues.

Application of Force Majeure Clauses

Force majeure is defined as a contract provision excusing a party from performing its contractual obligations when it becomes impossible or impracticable due to an event or effect that the parties could not have anticipated or controlled when the contract was signed. Earthquakes, floods and hurricanes are examples. Like delay clauses, whether a pandemic like Covid-19 will trigger the clause is highly dependent on the wording of the Contract. Some contracts will specifically name Pandemic as a Force Majeure, while others will not name it and you will be left to general principles to determine whether it would apply or not.

Builders Liens

So far, procedural and filing times for builders’ liens under the Builders’ Liens Act, have not been suspended unlike many other Alberta Statutes. With many companies and owners having difficulty with cash flow, it will be important for contractors and subcontractors to stay on top of their accounts receivable and file liens to secure any payment that might be possible.

Dispute Resolution

Most contracts have dispute resolution provisions where parties initially negotiate prior to an issue resulting in mediation, arbitration or resolution with the Courts. It is likely that in this unique time, many disputes will arise which will require proficient and timely attention to the issues. Thinking creatively and outside of the box will likely be necessary to ensure projects continue and parties are paid in order to keep businesses afloat and workers employed.

Conclusions

The issues in continuing construction projects in the pandemic may be myriad. However, with careful thought and attention to the issues that may arise, it is possible to face the challenges that are resulting from the Covid-19 pandemic in order to get through these difficult times and ensure your business continues and thrives in the future. The team at Walsh LLP is experienced in all these matters and together we can help safeguard your business and make sure your obligations to your contracting parties and employees are met.

Questions

If you have any questions regarding the above please contact our office at 403-267-8400.

Business Interruption Insurance

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Business interruption insurance is contractual and its availability will depend on the term of the specific insurance policy in issue. Over the past 20 years of reported decisions in Alberta regarding business interruption insurance, all revolved around a fire or explosion, usually in the oil and gas context, with one exception being a transformer failure causing an outage at a power plan. In all of those cases, the coverage of the event by the policy was not in issue.

It’s been observed that in most insurance policies, it is unlikely that business interruption insurance will cover COVID-19.  This is so as the policies typically require a physical act like a explosion or fire for the business interruption clause to be applicable. For example, typical business interruption insurance provisions in a policy state:

This Form insures, up to the amount stated in the Declarations, against loss directly resulting from necessary interruption of business caused by destruction or damage by the perils insured against, to building(s), structure(s), machinery, equipment or stock on the described premises.

As can be seen, the clause is limited by precondition of specified causations and specific items damaged. Further, in the above example, the business interruption insurance is limited to perils insured against, which would be listed in the policy. In British Columbia, the above clause was held to apply to the theft of jewelry where the peril insured against included “physical loss” and the business that the jewelry was stolen from, being a jewelry store, resulted in the jewelry being qualified as “stock”. What is clear is that what each claim and case arising from COVID-19 will turn on is the specific wording of the business interruption insurance policy provision and the perils the policy covers. The above example clause would not likely cover COVID-19 as it only covers perils that physically damage chattels and fixtures, being building(s), structure(s), machinery, equipment or stock on the described premises.

Most insurance policies also have a time limit that an insured can file a claim with an insurer. It is imperative that the insured meet such deadlines and proceed to seek coverages right away. If the claim proceedings in a contested fashion, it is important to ensure that the business interruption loss is properly quantified, and may in some circumstances require a qualified business valuator.

If your business’s insurance policy does not cover COVID-19, but it was understood from the insurance broker at the time the policy was purchased that such an event would be covered, there is the possibility that your insurance broker could be liable on the basis of several causes of action. This will depend on the specific interactions between the business and the broker, and whether the broker made any misrepresentations, was negligent etc. regarding the coverage.

Walsh LLP partner, Brendan Miller, has experience resolving disputes for businesses against their insurance companies. Following the 2013 Alberta Flood, Brendan acted for a number of businesses seeking coverage arising from the flood where insurance companies initially denied the claim. He has also acted against insurance companies refusing to cover fires and other disasters. If your business is seeking to apply for business interruption insurance, has done so and been denied, or the insurance company is not contacting you back, do not hesitate to contact Brendan.

COVID-19: Business Action Items

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In the face of the current uncertain environment, threat of business disruption follows and there are significant uncertainties regarding the effect of the COVID-19 on supply, production, distribution, human capital management, and other aspects of operations, as well as customer demand. We have outlined certain action items that you as a business owner can take to mitigate and address these concerns as part of your business continuity plan.

Supply Chain and Commercial

If you or your company have entered into a contract (i.e. supply or commercial lease), typically you are required by law to perform the agreed obligations. However, recent events may have or could impede your ability to do so and this is where your contract provisions govern your next steps and potential losses.

1. Force Majeure: Your contract may contain a force majeure provision. A force majeure clause is that no party to an agreement should be held to perform its obligations to the extent that performance is prevented by certain extreme circumstances outside that party’s control, such as war, labour strikes, acts of God (hurricanes, earthquakes or other natural disasters). The exact language used will be determinative when read in the entire context.
2. Impossibility and Frustration: The common law recognizes in limited circumstances certain excuses for non-performance, impossibility and frustration.
3. Impossibility means the performance becomes objectively impossible due to a supervening event beyond the party’s control. For example, impossibility could arise from the quarantine of an individual where the contract performance requires personal performance of the promisor, or where the contract requires continued existence of a specific thing which perishes or is otherwise unavailable.
4. Frustration is a party’s principal purpose for entering the transaction is destroyed or obviated due to a supervening event beyond the party’s control.

For suppliers entering into contracts, you may wish to include an express force majeure clause, inclusive of COVID-19 and disruptions in upstream supply, together with related provisions to directly address COVID-19. Failure to include this in new contracts could be interpreted as an assumption of risk of the effect of the known outbreak on the supplier’s contractual performance.

Alternatively, suppliers could request the other party to sign a waiver and assumption of COVID-19 risk, which may include disclosure of reliance on third-party suppliers and manufacturers that could result in disruption, delay or demand for product.

Other contractual risk allocations tools can also be utilized, for example, limiting remedies for breach of contract, misrepresentation, or inaccuracy, and expressly excluding consequential damages or losses (from lost profits or opportunity costs), as just some examples.

For existing contracts, typically the parties to a contract do not want the arrangement to fall through. You may want to consider discussing an Amending Agreement with the other party to the contract to postpone performance or implement other contractual elements, such as alternative supply source, until such time as it is achievable or economically viable to do so. However, if both parties mutually agree that the contract cannot be completed a simple Mutual Termination Agreement can be entered.

Landlords and tenants should also take into account commercial leasing considerations and review the rights and obligations they have in the face of a health emergency. Both the landlord and tenant will need to consider how their respective business could be impacted. Considerations include the obligation to pay rent and the scope of any force majeure clause, any obligation to remain open (“abandonment” often being a default), landlord obligation to keep the building safe and clean, landlord right to access and inspection, landlord right to govern the control and operation of a building (including the control of access to a building and common areas), and loss of use of the leased premises or common areas and the right to abate rent or exercise other remedies.

We recommend obtaining legal advice before navigating force majeure notice provisions and related contractual interpretation.

Business Acquisitions and the Business Viability

COVID-19 may impact the operational and financial health of businesses. For contracts governing mergers and acquisitions transactions, business acquisitions and dispositions, and some contracts for the supply of goods and services, whether entered or proposed, certain contractual provisions should be considered, and where possible address the risks.

1. Material Adverse Effect / Materially Adverse Change: These terms are often used to measure negative effects of certain events on the transaction or one of the parties. It is a common provision used to qualify the vendor’s representations and warranties in a purchase agreement or as a condition of closing, verifying that as of closing there is no material adverse change or effect to the business, results of operations, condition or assets, etc. A material adverse change should be disclosed and typically gives right to the purchaser to walk from the deal. It remains to be seen how the phenomenon of a pandemic will determine the interpretation of these provisions in Canadian law.
2. Due Diligence Condition: It is important to know the business you are dealing with, particularly when looking to purchase the business. As an example, purchasers will want a condition of disclosure and due diligence review included in contracts for business acquisitions. For vendors, disclosure should include a COVID-19 risk factor; something that can be drafted in to the contract itself.

Price structuring alternatives should be considered by purchasers to protect against overpaying for target businesses or assets that may lose value in the sign-to-close period as a result (direct or indirect) of the COVID-19 outbreak.

For those considering purchasing a business or entering into a merger and acquisition, it is prudent to include a due diligence condition and material adverse change provision.

Vendors should also be cautious of the risk of liability of certain contractual provisions for business dispositions that have not yet closed but for which a firm contract has been entered into.

In the case of contracts for the supply of goods and service, consider the addition of a provision to account for the risk that the company may incur expenses or delays relating to such events outside of its control, which could have a material adverse impact on its business, operating results and financial condition.

Other Action Items

It is recommended that in lieu of in person meetings you make use of the multitude of digital alternatives. Good news – the Electronic Transaction Act (Alberta) allows documents to be signed electronically in Alberta, with some exceptions.

While the scope of this article is not exhaustive, Walsh LLP offers online and telephone conferences to accommodate your business needs in a safe and efficient manner. We are dedicated to helping our local businesses navigate these uncertain times.

Please do not hesitate to contact the writer, Bethan Davies, a corporate commercial lawyer at Walsh LLP should you have any questions.

The Construction Of Constructive Dismissal

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Introduction

Constructive dismissal occurs when an employee resigns or quits due to a fundamental or material change to the employment relationship.  These changes can include new job duties and responsibilities, a change to pay structure, a demotion, relocation, or the cultivation of a workplace that creates a hostile work environment. In these circumstances the courts have acknowledged that the employment relationship cannot continue and the resignation can be invalid and the employee may be owed severance.

How Is Constructive Dismissal Determined?

Constructive dismissal is a complicated area of employment law and has been the subject of judicial debate for decades. Although the debate will continue, the Supreme Court of Canada somewhat recently provided a two-step process to evaluate whether or not constructive dismissal has occurred.

Step #1: Did the employer unilaterally breach a term of the employment contract?

• The contractual term can be express or implied. The breach must be serious and can be a single act or a series of acts that together breach an essential term of the employment contract. The breach is viewed from the perspective of a reasonable person.

Step #2: Was the employer’s breach of the employment contract justified?

• If the court finds that an express or implied term of the contract was breached, the employer must show that there was a legitimate business reason for the breach and determine whether or not the employer acted in good faith.

What Does This Mean For Employers?

Employers need be cautious about making any changes to an employee’s contract, working conditions, remunerations or other significant employment terms.  Employers must also be cautious when suspending employees, particularly when a suspension may be seen as unjustified and must continuously strive to ensure a safe and healthy working environment.

What Does This Mean For Employees?

Any change to the employment relationship should be reviewed by legal counsel.  While some changes can be justified, other changes may be outside the scope of the employer’s authority or the parameters of the employment contract and may fundamentally alter the employment relationship. If you are of the view that a significant change has occurred, then you should consult with legal counsel in order to be advised of your potential options.

Walsh LLP Is Here To Help

These criteria are not meant to be an exhaustive list of all the factors an employer or an employee should consider in a potential constructive dismissal situation. Many more factors are relevant to minimize the risk of inadvertently creating a constructive dismissal situation where severance and other possible damages may be owed. That is, the employer may unintentionally incur even more liability to the former employee (including human rights complaints or other claims). These liabilities can be significant and harm your reputation and your bottom line.

For this reason, we strongly encourage employers to seek legal advice if they are considering making changes to the employment relationship, restructuring, or have other employment questions. Likewise, we encourage employees, to seek legal advice to ensure that their rights are being protected and they are receiving fair compensation from their employer in respect to proposed changes to the employment contract.

For assistance or additional information on terminations and severance and legal considerations specific to your circumstances, whether as an employer or an employee, please contact Walsh LLP’s Employment Lawyers.

How Is Severance Calculated: Without-Cause Termination Of Employment

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Introduction

Alberta Employers, it’s true: our laws recognize your right to manage your workforce. This includes the ability to hire and fire employees. Although this article focuses on without-cause terminations, for more information on the distinctions between just-cause and without-cause termination, please see our article titled: Back to Basics.

Without Cause

Reasons for without-cause terminations can be broad, because the power to terminate is discretionary. Examples of without-cause terminations include an employer’s need to cut costs, to restructure, to downsize, or because the employee is no longer a good fit, or for other reasons. Although an employer is not legally required to provide a reason to the employee to dismiss them without cause, an employer is required to provide reasonable working notice, or else pay severance.

Determining Severance

So, how does an employer determine what to provide for severance? This is not an easy question and legal advice should be obtained. Severance assessment focuses on the specific facts of the termination of employment, and considers at least the following factors:

• Any valid and applicable policy manual; and,
• The employment contract.

Caution: Just because a termination provision is contained in an employment contract or policy manual, does not mean that it is legally binding or enforceable. Before relying on such termination wording, we recommend you obtain legal advice on the specific details.

If a policy manual or employment contract does not contain enforceable termination clauses, then the following tools assist in determining what amount of severance is required:

• Applicable employment standards legislation; and,
• The common law.

Employment legislation prescribes strict minimum standards, whereas the common determines severance on a case-by-case basis and the case-law has set some criteria to determine severance entitlements:

1. the character and nature of the employment;
2. the length of service;
3. the age of employee; and,
4. the availability of alternative employment.

Walsh LLP is here to help

These criteria are not an exhaustive list. Many more factors need to be considered in effort to minimize and employer’s risk to owing additional damages that go beyond severance. That is, the employer may unintentionally incur even more to the former employee (including human rights complaints or other claims). These liabilities can be significant and harm your reputation and your bottom line.

For this reason, we strongly encourage you to reach out to us for some legal advice if you are considering a termination, restructuring, or other employment questions. Likewise, we encourage employees, to seek legal advice to ensure that their rights are being protected and they are receiving fair compensation from their employer.

For assistance or additional information on terminations and severance and legal considerations specific to your circumstances, whether as an employer or an employee, please contact Walsh LLP’s Employment Lawyers.