By Howard Levitt
Being marketable has replaced employer loyalty as employees’ source of security
When I started my legal practice 46 years ago, people in Canada, while not quite like those in Japan, largely had jobs for life, if they wanted them. Employees were loyal to their employers and employers to their employees. It was not uncommon for employers to dip into their own pockets to help out employees in all types of personal jams. How often do we see that anymore?
Employees are now “sticky” — difficult to extricate yourself from. If the company is having difficulty and required to reorganize its operations to compete and they need to substantially change peoples’ jobs to do so, they often can’t for fear of a constructive dismissal action. And if they need to downsize to stay afloat, the costs of doing so makes the game not worth the candle.
As result, for economic reasons, companies keep employees in their existing jobs rather than fundamentally changing those jobs, or retain them rather than dismissing them. That makes those companies increasingly unproductive with too much overhead for their marketplace. They cannot even temporarily layoff their employees because, without a valid contract, a layoff is a constructive dismissal permitting the employee to sue as if they had been fired.
All of this is disproportionately exacerbated by the tariff war, driving entire industries into economic penury and rendering them unable to affordably reduce their workforces to face the economic challenges.
So how might employers react?
First by having employees sign contracts restricting their severance entitlements to the employment standard minimums, permitting them to temporarily lay off employees and permitting them to change their employees’ job functions or positions without that being a constructive dismissal. All well and good, except that the courts, particularly in Ontario, have seldom found a contract they won’t invalidate.
The second approach is to dispense with employees altogether by utilizing independent contractors. That has its risks, particularly the fact that, if they treat the contractor like an employee, the court will decide that that is precisely what they are. And it is hard, but not impossible, to run a business without a regular workforce, relying instead on different contractors who get called in to do a particular job and then go on to their next gig. Not only are independent contractors not entitled to wrongful or constructive dismissal, they are, for the most part, not even protected by any of the existing employment legislation — although some provinces are moving to provide some limited gig worker protection.
But there is a third approach employers are taking, all due to COVID, and it will cripple our economy.
Employers and employees learned to work remotely over the last few years. And if an employer is going to hire an employee, what difference does it make if that employee lives in the town where the company is situated? Indeed, what difference does it make if the employee resides in Canada at all? Look at all the Canadians who moved further south, to Florida, or Mexico, or to their country of family origin, while continuing to work for their Canadian employer.
Realizing that, why would an employer hire a Canadian at $45 an hour to perform a job or as an employee when they can hire someone from the Philippines or Bangladesh for $8 an hour? And if the employee is working remotely and the employer never interacts with them personally, how much loyalty can they expect from that employer? Smart placement agencies are scouring the world looking for inexpensive skilled foreigners for jobs in Canada.
What about employees? They are no more loyal than their employer counterparts. As I discussed in last week’s column, one-third of Canadian employees have a side hustle, double from just two years ago and yet more planning to start one in the near future. That too is a byproduct of remote work. Hard to have a job on the side if your employer is right there supervising you. But if you are “working” from home, the employer will be none the wiser.
That is what the future of work will look like. More foreign competition for jobs with Canadian companies, more employment contracts with minimum severance provisions and the utilization of more independent contractors. Dire for employment lawyers as well, who will have dramatically less work to do.
What should employees do in response? Invest in yourself! Be ready to be unemployed at any time, build up your resume and develop the skills required to move on to other jobs. Being marketable has replaced employer loyalty as employees’ source of security and, for all of the reasons above, these trends will only increase — and quickly.