Can Employers Eliminate Employee Hours Indefinitely Due to Business Demands? B.C. Supreme Court Says “No”
January 6, 2025
Article by:
Jacky Xu
Previously printed in the LexisNexis Labour Notes Newsletter.
The B.C. Supreme Court recently released a decision in a class proceeding involving past employees of a major hotel operated by Ocean Pacific Hotels Ltd. (“Ocean Pacific”).
The common issues in this proceeding were certified by Justice Matthews in Escobar v. Ocean Pacific Ltd., 2024 BCSC 1575.
This article examines only the central common issue before the Court – whether Ocean Pacific constructively dismissed the class members by eliminating their hours indefinitely in the face of the COVID-19 pandemic.
Background
In March 2020, the hotel industry was blindsided with the onset of the COVID-19 pandemic.
Ocean Pacific, the operator of the Pan Pacific Hotel in Vancouver, faced a plummet in business overnight. To maintain financial viability, it ceased scheduling shifts for hourly employees and moved to a reduced model of operating where only a small portion of employees would receive work.
Romuel Escobar was the representative of a certified class defined as regular hourly employees working at the Pan Pacific Hotel in Vancouver who had their work hours reduced to zero on an indefinite basis on or after February 20, 2020 and never again received regular shifts (the “Class Members”).
The Class Members alleged that Ocean Park fundamentally altered their terms of employment by eliminating their hours indefinitely in response to the COVID-19 pandemic. This formed the basis of their constructive dismissal claim.
Notably, Ocean Pacific relied on a common term found in many employment contracts of the Class Members: “[A]ssignment of hours will be subject to business demand” (the “Provision”). It argued that the plain words of the Provision meant there was no guarantee of work hours. There could be no fundamental change to the contracts of the Class Members, Ocean Pacific argued, where there was no work to be performed and the employees were not called for work.
Decision
Justice Matthews ruled in favour of the Class Members and held that Ocean Pacific fundamentally altered a term of the Class Members’ terms of employment without their agreement.
In coming to her decision, she stated that the Provision had be interpreted harmoniously with the contract as a whole. Reviewing the relevant jurisprudence, she held that the provision of work, performance of work and payment for work form the essence of a contract of employment: Hydro-Québec v. Syndicat des employé-e-s de techniques professionnelles et de bureau d’Hydro-Québec, section locale 2000 (SCFP-FTQ), 2008 SCC 43.
Justice Matthews also highlighted that employment contracts are characterized by an inherent power imbalance in favour of the employer: Health Services and Support-Facilities Subsector Bargaining Assn. v. British Columbia, 2007 SCC 27.
She accepted that the Class Members were assigned hours in accordance with the business demands of the hotel. However, she noted that most of the Class Members were paid wages on an hourly basis and their employment contracts described the work as “full time, hourly” and “unrestricted availability [was] required”. Effectively, the Class Members were required to be available for whatever shifts were assigned to them but were not entitled to any advance notice of the shifts they would be working.
Justice Matthews firmly rejected Ocean Pacific’s interpretation of the Provision, which would have allowed for an elimination of work hours indefinitely into the future. She reasoned that such an interpretation would force the Class Members to remain available for full-time work while Ocean Pacific provided no employment or pay for an indefinite time. Such an interpretation clearly violated the fundamental term of performing work in exchange for pay and exacerbated the power imbalance between the employer and its employees.
Further, Ocean Pacific produced evidence that events such as the SARS outbreak, the 2008 financial crisis and the 9/11 terrorist attack in New York all led to significant reductions in the Pan Pacific Hotel’s business and the hours of its employees. Those events, however, did not eliminate or reduce employee hours to zero indefinitely.
In summary, the plain wording of the Provision and the employment contracts and the hotel’s historical practice did not support the argument made by Ocean Pacific.
Takeaway
This case was decided in the context of the hospitality industry but the conclusion reached by Justice Matthews may have broad implications for all B.C. employers who employ hourly workers.
The language in the contract of employment is critical.
Employers seeking to eliminate an employee’s hours over an extended or indefinite period of time should rely on existing layoff provisions in the employment contract and comply with the applicable sections of the Employment Standards Act, R.S.B.C. 1996, c. 113 and, where necessary and appropriate, they should terminate employment in the usual course and provide any entitlements due to the employee on dismissal without cause.
While every effort has been made to ensure accuracy in this article, you are urged to seek specific advice on matters of concern and not to rely solely on what is contained herein. The article is for general information purposes only and does not constitute legal advice.
January 6, 2025
Previously printed in the LexisNexis Labour Notes Newsletter.
The B.C. Supreme Court recently released a decision in a class proceeding involving past employees of a major hotel operated by Ocean Pacific Hotels Ltd. (“Ocean Pacific”).
The common issues in this proceeding were certified by Justice Matthews in Escobar v. Ocean Pacific Ltd., 2024 BCSC 1575.
This article examines only the central common issue before the Court – whether Ocean Pacific constructively dismissed the class members by eliminating their hours indefinitely in the face of the COVID-19 pandemic.
Background
In March 2020, the hotel industry was blindsided with the onset of the COVID-19 pandemic.
Ocean Pacific, the operator of the Pan Pacific Hotel in Vancouver, faced a plummet in business overnight. To maintain financial viability, it ceased scheduling shifts for hourly employees and moved to a reduced model of operating where only a small portion of employees would receive work.
Romuel Escobar was the representative of a certified class defined as regular hourly employees working at the Pan Pacific Hotel in Vancouver who had their work hours reduced to zero on an indefinite basis on or after February 20, 2020 and never again received regular shifts (the “Class Members”).
The Class Members alleged that Ocean Park fundamentally altered their terms of employment by eliminating their hours indefinitely in response to the COVID-19 pandemic. This formed the basis of their constructive dismissal claim.
Notably, Ocean Pacific relied on a common term found in many employment contracts of the Class Members: “[A]ssignment of hours will be subject to business demand” (the “Provision”). It argued that the plain words of the Provision meant there was no guarantee of work hours. There could be no fundamental change to the contracts of the Class Members, Ocean Pacific argued, where there was no work to be performed and the employees were not called for work.
Decision
Justice Matthews ruled in favour of the Class Members and held that Ocean Pacific fundamentally altered a term of the Class Members’ terms of employment without their agreement.
In coming to her decision, she stated that the Provision had be interpreted harmoniously with the contract as a whole. Reviewing the relevant jurisprudence, she held that the provision of work, performance of work and payment for work form the essence of a contract of employment: Hydro-Québec v. Syndicat des employé-e-s de techniques professionnelles et de bureau d’Hydro-Québec, section locale 2000 (SCFP-FTQ), 2008 SCC 43.
Justice Matthews also highlighted that employment contracts are characterized by an inherent power imbalance in favour of the employer: Health Services and Support-Facilities Subsector Bargaining Assn. v. British Columbia, 2007 SCC 27.
She accepted that the Class Members were assigned hours in accordance with the business demands of the hotel. However, she noted that most of the Class Members were paid wages on an hourly basis and their employment contracts described the work as “full time, hourly” and “unrestricted availability [was] required”. Effectively, the Class Members were required to be available for whatever shifts were assigned to them but were not entitled to any advance notice of the shifts they would be working.
Justice Matthews firmly rejected Ocean Pacific’s interpretation of the Provision, which would have allowed for an elimination of work hours indefinitely into the future. She reasoned that such an interpretation would force the Class Members to remain available for full-time work while Ocean Pacific provided no employment or pay for an indefinite time. Such an interpretation clearly violated the fundamental term of performing work in exchange for pay and exacerbated the power imbalance between the employer and its employees.
Further, Ocean Pacific produced evidence that events such as the SARS outbreak, the 2008 financial crisis and the 9/11 terrorist attack in New York all led to significant reductions in the Pan Pacific Hotel’s business and the hours of its employees. Those events, however, did not eliminate or reduce employee hours to zero indefinitely.
In summary, the plain wording of the Provision and the employment contracts and the hotel’s historical practice did not support the argument made by Ocean Pacific.
Takeaway
This case was decided in the context of the hospitality industry but the conclusion reached by Justice Matthews may have broad implications for all B.C. employers who employ hourly workers.
The language in the contract of employment is critical.
Employers seeking to eliminate an employee’s hours over an extended or indefinite period of time should rely on existing layoff provisions in the employment contract and comply with the applicable sections of the Employment Standards Act, R.S.B.C. 1996, c. 113 and, where necessary and appropriate, they should terminate employment in the usual course and provide any entitlements due to the employee on dismissal without cause.
While every effort has been made to ensure accuracy in this article, you are urged to seek specific advice on matters of concern and not to rely solely on what is contained herein. The article is for general information purposes only and does not constitute legal advice.