Employment Contract Impossible to Perform: COVID-19 An Unforeseeable Event?
By: Michelle QuinnBusinesses all across Canada continue to be significantly impacted by the growing coronavirus pandemic. In the last few weeks we have witnessed, and continue to witness, unprecedented business and office closures, terminations and large-scale employee lay-offs that seem to be connected to the current COVID-19 global pandemic.
As a reminder, employees are entitled to a certain amount of notice (or pay in lieu of notice) when their employment is terminated without cause.
Under section 63 of the BC Employment Standards Act (the “ESA”), where an employer terminates an employee without just cause, the following amount of notice (or pay in lieu) must be provided:
- After three consecutive months of employment – one week’s pay;
- After 12 consecutive months of employment – two weeks’ pay;
- After three consecutive years of employment – three weeks’ pay, plus one week’s pay for each additional year of employment to a maximum of eight weeks
If an employer has terminated 50 or more employees at a single location within a short time-frame, then section 64 of the ESA, which governs group terminations, applies.
The group notice requirements are as follows:
| NUMBER OF EMPLOYEES | NOTICE REQUIRED |
| 50 to 100 employees | 8 weeks before effective date of first termination |
| 101 to 300 employees | 12 weeks before effective date of first termination |
| 301 or more employees | 16 weeks before effective date of first termination |
However, section 65 of the ESA outlines exceptions for when the requirements for employers to provide employees with individual notice of termination or pay in lieu of notice, or to provide notice of group termination, do not apply. Most notably, section 65(1)(d) provides that:
65 (1) Sections 63 and 64 do not apply to an employee
employed under an employment contract that is impossible to perform due to an unforeseeable event or circumstance other than receivership, action under section 427 of the Bank Act (Canada) or a proceeding under an insolvency Act,
If the closures are directly linked to COVID-19, and there is no way for the employee to perform work, such as working from home, the exception may apply to exclude employees from receiving compensation for length of service and group termination pay. In order to rely on this section, an employer must show two things:
- it was impossible to perform the contract; and
- impossibility of performance was due to an unforeseeable event or circumstances
The present situation involving COVID-19 is unprecedented and so it is difficult to determine at this time whether the “frustration” exception in section 65(1)(d) will apply to employees who are terminated. Therefore, each case will need to be closely assessed on its own set of facts.
If you have any questions or need specific advice about any of these statutory provisions, please contact a member of our Employment and Human Rights team. We are, as always, available by phone, email or video.
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Many BC employers will have issued temporary layoffs to employees with the start of BC’s COVID-19 lock down in March. Soon after the start of the provincial lock down, the BC Government extended the temporary layoff period under the BC Employment Standards Act (ESA) from 13 weeks to 16 weeks for COVID-19 related layoffs. On June 26, 2020, the BC Government announced a further extension to 24 weeks expiring on August 30, 2020.
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Parmar v. Tribe Management Inc., 2022 BCSC 1675 is the first civil court decision to tackle whether an unpaid leave of absence for noncompliance with an employer’s mandatory vaccination policy can be considered constructive dismissal. The issue before the Court was whether Tribe Management Inc.’s decision to place Ms. Parmar on an unpaid leave of absence was reasonable following the implementation of a mandatory vaccination policy given the circumstances of the COVID-19 pandemic at the time. Ms. Parmar refused to be vaccinated due to choice. She did not apply to her employer to be exempt from the mandatory vaccination policy based on medical or religious reasons. The BC Supreme Court found that it was not a constructive dismissal. Instead, it found that Ms. Parmar had repudiated the employment contract. As a result, the claim was dismissed, and Ms. Parmar was not entitled to any damages.
