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Digest of Benefit Entitlement Principles - Chapter 6
CHAPTER 6
VOLUNTARILY LEAVING EMPLOYMENT
6.5.0 VARIA
6.5.1 Work Force Reduction
6.5.1.1 Regulatory Authority
6.5.1.2 Within a Particular Context
6.5.1.3 Definition by Regulation
6.5.1.4 Distinct Responsibilities
6.5.1.5 Important Questions
6.5.2 Leaving part-time employment held concurrently with full-time employment
6.5.3 Suspension of seniority rights during a lay-off
This section will include various subjects related to the issue of voluntarily leaving employment employment that will be published as the need arises.
Under the authority of EIA 54(z)(2); and EIR 51; as follows:
(1) Subject to the Act and these Regulation, but notwithstanding sections 30 of the Act, a claimant who has left employment in accordance with an employer work-force reduction process that preserves the employment of co-workers may be paid benefits where(a) the claimant accepted an offer to leave that employment voluntarily; and(2) For the purposes of subsection (1), an employer work-force reduction process is a process
(b) the employer has confirmed that the claimant's leaving resulted in the actual preservation of the employment of a co-worker whose employment would otherwise have been terminated in the course of the work-force reduction process.(a) that is initiated by the employer;
(b) that has as its objective a permanent reduction in the overall number of employees;
(c) that offers employees the option to leave employment voluntarily; and
(d) the elements of which, including the elements described in paragraphs (a) to (c), are documented by the employer.
6.5.1.2 Within a Particular Context
We are aware that using the term "work force reduction" in employment insurance regulations may give rise to some confusion. In fact, this term has long been used for personnel management and in collective agreements. It generally deals with a myriad of mechanisms that an employer can use to reduce staff, permanently or temporarily. The term should therefore not be viewed in its usual application but rather applied to a process of limited duration and purpose and within the specific context of Regulation 51. That regulation provides for an exception to the Act1 which disqualifies claimants who voluntarily leave their employment without just cause.
Businesses must constantly adapt to market forces. Employers, both large and small, have always had procedures for hiring and releasing personnel. In a restructuring context, employers and workers reach agreements as to who will stay, who will go and what special provisions will be provided to those who leave. Those who leave allow other workers to stay on and the business to be competitive.
A person who voluntarily leaves his or her employment without just cause is indefinitely disqualified from receiving benefit. However, a regulatory provision2 allows workers who agree to leave their employment under a work force reduction process and preserve jobs of their co-workers, to receive unemployment insurance benefits. Of course, they must also meet the other entitlement conditions. These are not discussed here.
The legislation requires a strictly individual approach to claimants leaving their employment. However, in the context of employer downsizing, a collective approach is acceptable in the sense that all of the workers are affected by the work force adjustment. As such, the overall number of employees let go will not change, but those who do leave will not necessarily be those who would have been targeted for lay-off under the collective agreement or some other agreement. The end result is that the Commission ends up with the same number of claimants. Whether it is a small, medium-sized or large firm, this regulation provides firms with the flexibility needed to restructure and reduce their work force.
An employer may resort to attrition to reduce the payroll. Attrition will reduce the work force by not hiring workers when someone leaves for whatever reason. This will result in a reduction of the total work force but will not meet the requirements of Regulation 51 as lay-off of employees is not an option when we are dealing with downsizing by means of attrition.
Besides attrition, an employer may take other measures, such as reducing the work week and sharing the work among all employees or proceeding unilaterally with a lay-off. Neither of these processes would meet the regulatory requirements3.
The fact that an employer has a work force reduction process does not necessarily mean that all employees who leave their employment during this period do so in the context of this provision. Employees who are not covered by the work force reduction process and nevertheless decide to leave employment cannot invoke the work force reduction process to obtain relief from a disqualification under the Act4. They have not left their employment within the framework of a work force reduction process.
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6.5.1.3 Definition by Regulation
The regulation1 does not impose any restrictions on an employer who wishes to establish a work force reduction process. However, employees who voluntarily leave their employment under a work force reduction process that meets the regulatory text2 may come within the exception and not be disqualified from benefits.
This regulation is analysed in two stages.
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Stage one:
This initial stage applies to all workers. It involves determining whether a given employer has a work force reduction process within the meaning of the regulation1.
Fact finding may be conducted first on the issue of compliance with the regulation2. The results may be distributed to interested parties or to other Commission offices.
A work force reduction process, as defined in the regulatory text3, must have the following four elements:
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It is the employer who must institute a process designed to reduce the work force. Whether it is a process affecting only a small sector of the business or involves a larger, national process is of no importance. The number of employees affected, the locations, operations and activities covered by the process; its duration; whether the process grants additional or takes away benefits provided under a collective agreement or by provincial laws, is the employer's responsibility.
It is not the Commission's role to approve or reject the employer's plan. The Commission confines itself to determining, in the case of a claimant who left his or her employment, whether the work force reduction measures taken by the employer are consistent with the regulatory text1.
It is extremely important, therefore, that the group covered by the work force reduction process be identified; if the claimant does not fall within this group, he or she did not voluntarily leave employment under this process. The group may be all of the employees, or be limited to a sector, or a particular group or a work site.
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The process established by the employer must lead to a permanent reduction in the total number of employees. This means that at the end of the process the business will have a work force smaller than the one existing before implementation. There are many different combinations of an employer's work force that an employer must take into account when determining what will be the overall number that must be reduced. Thus, the overall number of employees may also include seasonal, temporary or on call employees1.
In other words, even if no worker took advantage of the employer's offer, the employer would consider laying off from within all categories of workers, including seasonal, temporary or on call, or reduce the possibility or frequency of the recall of these employees, in order to reduce the work force by the numbers initially anticipated.
Work force reduction in a small business might conceivably affect as few as only one employee and, if it meets the criteria, allow a claimant who has voluntarily left employment to avoid a disqualification under the Act2.
Favourable economic conditions, a sudden increase in demand, access to new markets, or the marketing of new products are all factors influencing the business and future work force levels. In determining whether the process is consistent with the Regulation, the relevant situation is the one prevailing at the time the company instituted the work force reduction process.
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- Jurisprudence Index/voluntarily leaving employment/applicability/workforce reduction/; P. Pilon (A-174-95, CUB 27011);
- EIA 30.
The employer must offer the employees covered by the work force reduction process the option of voluntarily leaving their employment. All employees, or a particular group of employees, are offered the option of voluntarily leaving employment in order to preserve the employment of a co-worker who would otherwise be let go. Only an employee who has voluntarily left his or her employment under a work force reduction process can take advantage of the regulation.
The employer must furnish the Commission with information indicating that this is in fact a permanent reduction in the work force, that personnel were informed, and that the employees covered by this process were given the option of voluntarily leaving their employment.
This might take the form of a letter, a notice, a memorandum or some other relevant documentation. The work force reduction process may be part of or outside of the collective agreement1.
Hypothetical situations or vague uncorroborated statements concerning possible or potential reductions are not acceptable.
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- Jurisprudence Index/voluntarily leaving employment/applicability/workforce reduction/; P. Pilon (A-174-95, CUB 27011).
Stage two:
The second stage covers the individual claimant.
Once it has been decided that the employer's work force reduction process meets the conditions specified in the regulation1, fact finding is required for each individual claimant. The employer's confirmation can take a number of forms. The employer and the agent responsible for conducting the fact finding on the work force reduction process may agree on a procedure that best fulfills the requirements of the parties and this may involve a contact person with the employer.
To facilitate the fact finding, employers are informed through a public affairs publication to note the "Comments" block of the Record of Employment (ROE). Even though the ROE is so indicated, it must be confirmed that the employer's work force reduction process meets the conditions of the Regulation2. This is usually done by the process that the Region has in place for exchange of information on work force reduction.
A worker voluntarily leaving employment under a work force reduction process must complete an application for benefits. The agent will then verify whether it can be concluded, from the facts and the documents provided to the Commission, that the claimant voluntarily left his or her employment under a work force reduction process that complies with the regulatory provisions. The agent must also be able to conclude that the claimant's departure resulted in the preservation of the employment of a co-worker who would have otherwise been let go in the course of the work force reduction process. This conclusion can only be made after confirmation by the employer.
It is not necessary to identify by name the co-worker who preserved his or her employment through the claimant's departure. However, the employer must confirm that someone would have lost his or her employment under this work force reduction process and that the claimant's departure under this process resulted in the preservation of a co-worker's employment.
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6.5.1.4 Distinct Responsibilities
An employer may consult with the Commission when initiating a work force reduction process. The Commission will provide an explanation of the applicable elements and conditions set by the regulation1, so as to avoid any confusion concerning respective responsibilities.
While the Commission cannot provide a blanket decision to an employer that applies to all employees, the Commission can provide prior confirmation that the employer's work force reduction process meets the conditions of the regulatory text2. At that time the officer would explain the requirement for confirmation on an individual basis that the claimant by voluntarily leaving employment saved a job of a co-worker and establish the mechanism by which that information will be provided.
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The conditions set out in the regulation will be met when each of the following questions can be answered in the affirmative:
- Did the claimant voluntarily leave his or her employment?
- Does the claimant belong to a group of employees covered by the work force reduction process?
- Is this employer work force reduction process that:
(a) was initiated by the employer?
(b) has as its objective a permanent reduction in the overall number of employees?
(c) offers employees the option to voluntarily leave employment?
(d) is documented? - Does the employer confirm that the claimant's leaving resulted in the preservation of the employment of a co-worker who would otherwise have been let go in the course of the work force reduction process?
6.5.2 Leaving part-time employment held concurrently with full-time employment
Claimants often occupy more than one job at the same time giving rise to situations where the claimant leaves one job voluntarily while maintaining the other. The issue of voluntary leaving is applicable to the employment left voluntarily. When a claimant is working part-time for one employer and full -time for another employer concurrently, and leaves the part-time employment - with the expectation that their full-time employment will continue - then the voluntary separation from the part-time employment is with just cause.
These cases arise when the full-time employment ends unexpectedly after the decision was made to leave the part-time employment, giving rise to a claim for benefits. Claimants who accept part-time work in addition to already held full-time work should not be penalized for leaving the part-time employment - as long as they do so with the knowledge that their full-time employment will continue. The reason for separation from the part-time employment is not determinative of the issue. It is sufficient that there is an expectation that the full-time employment will continue.1
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6.5.3 Suspension of seniority rights during a lay-off
Occasionally employers reach an agreement with representatives of their employees whereby the parties agree to temporarily relinquish seniority rights during layoffs. Such agreements avoid temporarily replacing staff who are skilled and experienced in a given sector of the business with employees from another sector selected solely on the basis of their seniority, but who may be less effective and may have to be trained. This allows employers to continue business activities in a viable and competitive way.
Not exercising seniority rights under normal circumstances constitutes voluntary leaving. However, if the loss of employment is as a result of an agreement between the employer and the representatives of their employees to temporarily suspend seniority rights, and all the conditions described below are present, then the loss of employment will be deemed a layoff.
a) The agreement between the parties to temporarily waive seniority rights of employees of a sector of activities must be for a limited period, applicable only during temporary lay offs; and
b) Approval of all the employees protected by the seniority clause – not only those subject to the lay-off - is required before their representatives may negotiate with the employer; and
c) Neither the approval nor the agreement itself can refer to specified or named individuals. It is sectors of activities that are affected by the agreement, not individuals; and
d) Once the seniority rights are suspended, it is essential that the lay-offs be determined by the business needs and that the individuals have no personal choice to be laid-off or not; and
e) These agreements or “letters of agreement” are not replacing the collective agreement in effect, but rather, are only temporarily suspending the provisions of the collective agreement dealing with seniority rights; and
f) These must be documented, bona fide agreements, which are not made to circumvent the EI Act or to give advantages to certain individuals.
These agreements cannot be unilaterally extended by the employer. If it becomes necessary to extend the provisions, a new agreement must be re-negotiated between the parties.
This situation must not be mistaken with that outlined in Section 51 of the Employment Insurance Regulations (EIR) (work force reduction) which applies to situations in which claimants have voluntarily left their employment and where there have been measures taken to permanently reduce the employer's work force and to protect the jobs of other workers.
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