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Dec 07, 2020

The changing nature of staffing and payroll in a post-pandemic world

Why small and mid-sized business owners are now better equipped to deal with sudden shifts in their human resources

When the pandemic hit last March, many small- and medium-sized business (SMB) owners found themselves facing critical human resources hardships. While some owners made difficult layoff decisions, others imposed workplace restrictions to maintain social distancing. Still more faced challenges due to reduced revenues, which meant trimming their payroll.

            According to Edmonton employment lawyer Maurice Dransfeld, a partner at McLennan Ross LLP, businesses scrambled to adjust to the new normal, and then began figuring out how to put together a puzzle that included reduced work arrangements, provincial labour laws and various federal wage and employer subsidy programs.

            “There was a lot of hustling in the beginning to deal with this HR emergency,” he says. But knowing the likelihood of a second wave, Dransfeld adds, business owners seem much better prepared to respond.

Because payroll for most businesses is the largest expense, it’s critical to think about employment contracts through a risk management lens. At the same time, Dransfeld points out, SMBs want to be compassionate in dealing with employees during a pandemic, and also want to be in a position to rebound quickly when restrictions are lifted.
He offers several recommendations:
  • Anticipate changes in labour rules. Early on, employers could layoff workers in Alberta, for 90 days out of a 120-day period, but when that window proved too short, the province extended that span to 180 days as long as the layoff is related to COVID. “In Saskatchewan and Manitoba, the governments suspended existing layoff protocols; in B.C., individuals need to apply for a ‘variance.’ In Ontario, changes were made to prevent temporary layoffs from becoming permanent job losses.” But even that longer period isn’t enough for some SMBs. Dransfeld says firms can ask employees to make the layoff indefinite, with benefits contributions continuing as a means of retaining staff. In this case, employees must agree to the terms of the indefinite layoff.
  • Wage adjustments. Employers can propose wage reductions, to be off-set by federal employment programs. But if reductions go too far, employees can say they’ve been terminated, triggering severance payments.
  • Work sharing. In the first wave, some firms encouraged employees to share positions for a reduced wage as a means of holding on to workers while dealing with less revenue or other restrictions.
  • Lead by example. Dransfeld cautions business owners against targeting individual departments for payroll adjustments, pointing out that it’s better to make the change evenly. He also advises employers to show that owners and senior managers also take pay reductions.

In the case of unionized workplaces, management will negotiate with unions instead of individual employees, and doing so within the context of the collective agreement. Dransfeld says most collective agreements include a provision for employers and unions to enter into a “letter of understanding” that allows both sides to make changes as necessary. 

With the pandemic, Dransfeld says, some employers found themselves juggling their workforces as employees had to self-isolate. The sudden changes in the roster of available workers meant, in some cases, that employers and unions had to temporarily change job roles provisions or figure out how to bring in replacement or temporary workers. 

He notes that in most cases, even unions with a reputation for rigidity were prepared to negotiate work-arounds that would allow the business owner to keep the doors open. “We saw right away that there were conversations opening up.” Dransfeld urges firms that find themselves in this position again to be prepared to share information about their financial position as a means of opening up a dialogue about how best to respond.

Labour laws and employment insurance policies weren’t designed to respond to crises like the pandemic. Fortunately, there is evidence that business owners who face more layoffs or closures can draw on the solutions developed in the spring. Those solutions can help guide a quicker response and, most importantly, ensure long-term viability of their companies and future work for their employees.