Considerations for employers rehiring with help from federal wage subsidies

“While our seat capacity and operations have decreased by more than 90 per cent overnight, we are trying to keep as many of our employees as possible during the crisis and this measure will certainly help,” said Calin Rovinescu, president and chief executive officer at Air Canada, in the release.

Read: Feds introduce 75% wage subsidy to help employers keep staff during coronavirus

Through the Canada Emergency Wage Subsidy, many employees will receive higher pay than if they applied for employment insurance, and will also be able to maintain their health insurance and other benefits.

For companies following in Air Canada’s footsteps, bringing people back can be an emotional process, says Paula Allen, senior vice-president of research, analytics and innovation at Morneau Shepell Ltd. Rehires are going to be nervous, she says, and managers will have to handle that upfront.

“I think the best thing to do is put yourself in the place of that person. And the first thing they’re going to be thinking is, ‘Am I going to be the first to go again? How did the decision get made that I was let go, because not everybody in the organization was let go? Am I going back into a position that’s at risk?’ And that’s a very real concern. It’s a very real risk. If people get the impression that they’re expendable then they’ll have no loyalty to you.”

Employers should make every effort to assuage any uncertainties they can, she says. Even if an employer explained the rationale to lay off a particular person, whether it’s the business situation, the employee’s level of seniority or other factors, the rehire needs to hear those assurances again. “If you were in that situation, you would want to the rationale behind the termination or temporary termination, as well as the rationale behind the rehire.

Read: Coronavirus emergency response benefit doesn’t go far enough, say gig workers

“Managers need to check in with people, because being let go is very traumatic,” adds Allen.

While the situation is different for every company, it remains to be seen how quickly employers will decide whether to rehire workers, says Ernie Schirru, a partner at Koskie Minsky LLP. “What we’ve seen from the federal government in the last three weeks are policies and provisions that are things that would normally take between several months and several years.”

Unionized employers should contact their unions to discuss the prospect of bringing employees back, as well as what obligations they’re required to maintain according to their established collective agreements, he says. “Collective agreements have a lot of other compensatory benefits, like fringe benefits, contributions to health and welfare plans, which they may want some relief from if they’re prepared to bring employees back and pay them 75 per cent when they may not actually have the work demands to justify it, but for this wage subsidy.”

For employers that aren’t subject to collective agreements, the wage subsidy provides them with an opportunity to avoid any continuing liability for arguable constructive dismissal claims, notes Schirru.

Read: Employers to have easier time accessing coronavirus wage subsidy program

“In circumstances where individuals are subject to employment contracts — not in a unionized context — that do not contemplate the ability to lay them off, . . . there is a prospect of a potential constructive dismissal claim and damages continue to accrue the longer someone’s off.  So this is an opportunity for employers to reinstate the employment relationship and to limit their accrual of any liability for wrongful dismissal claims arising out of a layoff that wasn’t otherwise contemplated in their employment contract.”