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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Employee or independent contractor: which one are you? You might even be a dependent contractor. This intermediate category of “dependent contractor” has emerged over the last few years. Unlike an independent contractor, a dependent contractor must be provided with reasonable notice of termination of the contractor relationship. To determine whether a person is an employee or a contractor, the CRA and the Courts look at the substance of the relationship as a whole, which is exactly what the BC Supreme Court did in the case of Glimhagen v. GWR Resources Inc., 2017 BCSC 761
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Over the past year, the B.C. government introduced many changes that have affected both employees and employers, such as, the increases to minimum wage and amendments to the Employment Standards Act. Last year, the government introduced several amendments to the Employment Standards Act including changes to parental and maternal leave. In late May 2019, the Employment Standards Amendment Act, 2019 was made law with additional amendments centered on the government’s priorities to better protect children and support workers.
