The Covid-19 pandemic has had a dramatic effect on many industries, companies and employees. Initially, the government shutdown impacted many industries unless they were considered essential services. This resulted in many companies being unable to carry on their normal business. Many had to close entirely. It was not known whether the closures would be temporary, how long they would last, how revenues would be impacted when they reopened, or whether the companies would even survive the pandemic. Companies have had to make some very difficult decisions.
With respect to the pandemic’s effect on employment law, many employers were faced with having to do temporary layoffs even though their employment contracts did not actually give them the right to do so. However faced with the financial realities of having to pay employees without the usual revenue coming in, many companies did not have a viable option other than to do temporary layoffs or reduce employee salaries across the board until things returned to normal. This resulted in the de facto constructive dismissal of those employees. However, many employees have not necessarily pursued that legal remedy because they are faced with the reality of wanting to return to their jobs when possible; if possible that is. As we wait for the economy to slowly reopen and see how many companies are left standing, it is likely that those employees that do not get recalled will be contacting lawyers to see what their legal options are. The employer’s in turn could be facing numerous lawsuits from employees claiming constructive dismissal. You can be sure that employment lawyers will be adding a temporary layoff clause to all new employment contracts. In the past, these types of clauses were mostly only seen in collective bargaining agreements.
With respect to the pandemic’s effect on commercial tenants and landlords, they too have been hit hard. Some tenants were forced to close because they were not considered an essential service, yet they were still obligated to pay rent on their leased premises. In some cases, the landlords have been accommodating and offered to defer rent to a later date, but this is not really a viable option for many commercial tenants because their revenues will likely be drastically reduced once they are able to reopen, while their debt increased because there are now rental arrears owing. Some commercial landlords have used this as an opportunity to evict commercial tenants so that the landlord can try to re-lease the premises for a higher price or a better tenant. But will that really happen? We do not really know at this point whether empty premises will remain empty or what the demand will be to lease empty premises. I suspect that there will be a lot of lawsuits coming out of this. A commercial landlord should think twice about evicting businesses that are unable to pay rent at this time because they could be facing empty premises for the foreseeable future.
I have been providing legal advice to many commercial landlords and businesses during this unprecedented and uncertain time.