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Employers be warned: If you aren't careful, remote work could become a permanent feature of your staff's employment terms – Financial Post

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Howard Levitt: Order them back the office now or risk a constructive dismissal action later

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With two recent important pronouncements on both sides of the border, employers are worried about whether they can keep up with the ever-evolving issues surrounding COVID-19. Today and next Saturday, I will answer the many employment law questions swirling about.

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But first, those proclamations.

Prime Minister Justin Trudeau announced that all federal government employees, including Crown corporations, must be vaccinated in order to retain their jobs, even if they work from home. This is revelatory since, absent legislation, employers could never compel employees — who they had permitted to work from home — to be vaccinated.

South of the border, Ken Griffin, founder of hedge fund Citadel LLC, publicly pronounced: “It is time to get employees back to work because working from home prevents the mentorship, interactions, managerial experiences and exchange of ideas allowing U.S. businesses to prosper.”

He noted that, for younger employees, “the loss of early career development opportunities is going to cost us dearly over the decades to come.”

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But he cautioned that “if you talk to other CEOs, they live in fear of how we will be publicly persecuted for delivering this straightforward message: It is time to go back to work.”

As he put it: “We need it for our government workers. We need it for corporate leaders. We, as a country, it’s time to get back at it,” asserting that remote work was damaging America’s competitiveness relative to Chinese workers. He called for U.S. President Joe Biden to deliver that message from the top.

Below are my recommendations to some of the questions that are perplexing both employers and staff.

Can, and should, employers require employees to return to their workplace?

What is true south of the border is equally so here. Most employers are anxious to get their employees back into the offices. A study on the productivity of the Canadian workforce by enterprise firm Aternity Inc. found that employees who work from home are 22 per cent less productive per hour worked relative to those at the office and, more alarmingly, found that productivity gap increases the longer employees remain home.

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This desire to get employees back to the office is juxtaposed with a different competing fear, that ordering employees back to work will result in many resigning at a time when it is already difficult to recruit and retain for most positions. The majority of studies have shown that employees working from home wish to continue to do so, at least part of the time, and a significant percentage of the workforce is already considering changing jobs. Therefore, ordering employees back to the office against their will will result in many employees resigning, in an era already called The Great Resignation.

Some employees work as, or more, effectively remotely. Employers have the legal option of permitting that for those who do. Companies can also legally discriminate by permitting some employees to work from home and not others. That selection can be based on productivity, the type of work, or any criterion that they wish, even arbitrarily. Employers will have to conduct a delicate balancing act in deciding who will be permitted to continue remote work as our offices reopen.

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Can employers order employees back to the office?

Employers have the unequivocal right to force employees back to work and to declare them to have abandoned their employment without compensation if they refuse.

Q: Is there a risk from permitting continued remote work?

A: I issue a cautionary note. If you permit employees to work from home much longer than practically and legally necessary, it will become a term of their employment. Ordering them back to work after that will constitute a constructive dismissal. We are reaching that tipping point now.

I recommend that any employer who wishes to permit employees to work from home for much longer have these employees sign contracts agreeing that they can be recalled to the workplace upon one month’s notice. If they refuse to sign, order them back now or risk a constructive dismissal action later.

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Q: Who pays the expenses of remote working?

A: I am often asked whether employers are required to pay the inherent expenses of employees working from home. There is no such requirement.

Q: Should you have a formal vaccination policy?

A: Every employer should have a vaccination policy, distributed to all employees, to ensure that everyone understands the rules. Such a policy provides direction to employees and protection to the employer in the event of litigation.

I am constantly asked by clients what that policy should contain. The answer is simple. Whatever the employer wishes it to. Subject to compliance with public health guidelines, there is tremendous flexibility in potential vaccination policies.

Whether you should require mandatory vaccinations and for what groups is a function of the employer’s corporate culture and what makes most sense in its particular context.

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Q: Should you require mandatory vaccinations?

A: A mandatory vaccination policy will invariably result in some employees departing. Concomitantly, not having such a policy will upset those vaccinated employees who do not wish to work near the unvaccinated. That is part of the balancing employers must consider.

COVID-19 has become a pandemic of the unvaccinated. The vast majority of employees contracting COVID-19 and, in particular, filling our hospitals are unvaccinated, particularly telling since only about 20 per cent of Canadians are unvaccinated.

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    Howard Levitt: Vaccine passports emerge as battleground between inoculated, defiant in workplace

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A compelling argument in favour of compulsory vaccinations for those employees who work closely with co-workers, customers or members of the public is that if someone contracts COVID-19 in that workplace, the employer cannot be successfully sued for negligence.

Given that most governments and chief medical officers across Canada now support mandatory vaccination, it will not be long before a court may find a ‘duty of care’ in workplaces requiring mandatory vaccinations and that employers who do not require it are, prima facia, negligent if someone contracts COVID-19 in that workplace.

If the result is death or permanent disability, the legal lawsuit could be in the millions of dollars. Since litigation is determined based on the law at the time a matter reaches court, this — still future — duty of care may well apply to a company’s actions today. That further militates in favour of mandatory vaccinations.

Got a question about employment law during COVID-19? Write to Howard at levitt@levittllp.com.

Howard Levitt is senior partner of Levitt Sheikh, employment and labour lawyers with offices in Toronto and Hamilton. He practices employment law in eight provinces. He is the author of six books including the Law of Dismissal in Canada.

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Annual inflation rate hits 4.4 per cent in September, Statistics Canada says – CP24 Toronto's Breaking News

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Jordan Press, The Canadian Press


Published Wednesday, October 20, 2021 8:48AM EDT


Last Updated Wednesday, October 20, 2021 3:37PM EDT

OTTAWA – The cost to put food on the table and gasoline in the car pushed up the cost of living in September, lifting the annual pace of price increases to a near two-decade high with no clear end in sight to the elevated readings.

Overall, headline inflation last month was 4.4 per cent – the fastest annual pace since February 2003. Statistics Canada said the annual inflation rate would have been 3.5 per cent had it excluded gasoline prices from its calculation.

Economists warned Wednesday that inflation readings could hover around four per cent until the end of the year.

Driving much of the overall rise in the consumer price index were prices at the pumps, as consumers paid 32.8 per cent more last month for gasoline than in September 2020.

Food prices overall rose 3.9 per cent year-over-year, compared to the 2.7 per cent recorded in August, mostly because of higher prices for food at stores.

Meat prices rose at their fastest annual pace since April 2015, pushed higher by double-digit increases in chicken and beef. Bacon prices were up 20 per cent.

Even the smallest creatures had an outsized effect: prices for shrimp and prawns lifted seafood prices because of supply chain issues among major exporters.

Garima Talwar Kapoor, director of policy and research at Maytree, an anti-poverty think-tank, said people with higher disposable income may simply forgo some restaurant outings if inflation remains high.

The choices would be more severe for those with low or fixed incomes whose earnings have stayed stagnant, she said, meaning their purchasing power is diminished as prices rise faster than wages.

“Their ability to be able to manage their disposable income becomes tighter and tighter, and you’re not foregoing a nice dinner out, but you’re actually forgoing a meal, you’re foregoing prescription medication and necessities like that,” Talwar Kapoor said.

September marked the sixth consecutive month that headline inflation has clocked in above the Bank of Canada’s target range of between one- and three-per-cent, something that hasn’t happened since a six-month stretch that ended in March 2003.

CIBC senior economist Royce Mendes said a silver lining is that consumers collectively are sitting on piles of savings that should help them and businesses weather the inflationary storm.

“That’s the only bit of good news that we can say about the inflation this time around is that the economy might be able to handle it a little bit better than it would have in previous decades,” he said.

Boosting prices has been global supply-chain bottlenecks that have driven up transport costs, which are being passed on to buyers.

Bank of Canada governor Tiff Macklem said last week bottlenecks have proven more persistent than first believed, but recent inflation readings are “transitory,” or a temporary issue.

BMO chief economist Douglas Porter said he expects inflation to average 3.3 per cent this year and next because of the broad nature of price pressures, such as for new vehicles or new homes.

“Suffice it to say,” he wrote, “that strains the definition of transitory.”

Statistics Canada said the average of the three measures for core inflation, which are considered better gauges of underlying price pressures and closely tracked by the Bank of Canada, was 2.67 per cent for September, up from 2.6 per cent in August. September’s average was the highest since December 2008.

Mackelm has said the bank would act if the current bout of price increases looks to become more than one-off pressure points.

Measures it could take include raising the key interest rate or further rollbacks in its stimulus-measure bond purchases. Higher rates would push up interest rates on mortgages, car and business loans, which usually cools consumer demand.

The Bank of Canada is scheduled to make its next interest-rate announcement on Oct. 27.

Macklem has said a rate hike wouldn’t happen until later next year, but there are growing expectations the central bank won’t wait that long, said TD senior economist James Marple.

“Lift off may not come as early as markets are currently pricing, but the risks are certainly moving to sooner rather than later,” Marple wrote.

This report by The Canadian Press was first published Oct. 20, 2021.

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China Evergrande shares fall in resumed trade after $2.6 billion deal collapses

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Shares of China’s Evergrande Group slid as much as 14% on Thursday after a deal to sell a $2.6 billion stake in its property services unit fell through, in the latest blow to the developer whose massive debt woes have rattled global markets.

Evergrande said on Wednesday it had scrapped a deal to sell a 50.1% stake in Evergrande Property Services Group Ltd to Hopson Development Holdings Ltd as the smaller rival had not met the “prerequisite to make a general offer”.

Both sides appeared to trade blame for the setback, with Hopson saying it does not accept “there is any substance whatsoever” to Evergrande’s termination of the sales agreement, and it is exploring options to protect its legitimate interests.

The deal is the developer’s second to collapse amid its scramble to raise cash in recent weeks. Two sources told Reuters last week the $1.7 billion sale of its Hong Kong headquarters had failed amid buyer worries over Evergrande’s dire financial situation.

The latest setback also comes just ahead of the expiry of a 30-day grace period for Evergrande to pay $83.5 million in coupon payments for an offshore bond, at which time China’s most indebted developer would be considered in default.

Evergrande in an exchange filing on Wednesday said the grace periods for the payment of the interest on its U.S. dollar-denominated bonds that had become due in September and October had not expired. It did not elaborate.

“The scrapped transaction has made it even more unlikely for it (Evergrande) to pull a rabbit out of a hat at the last minute,” said a lawyer representing some creditors, requesting anonymity as he was not authorised to speak to the media.

“Given where things are with the missed payments and the grace period running out soon, people are bracing for a hard default. We’ll see how the company addresses this in its negotiations with creditors.”

REASSURANCES

Trading in the Hong Kong-listed shares of China Evergrande, its property services unit and Hopson all resumed on Thursday after a more than two-week suspension. Evergrande trimmed opening losses and was down 9.8% in early trade. Its property services unit dropped 5%, while its electric vehicle arm plunged as much as 10.3%. Shares of Hopson rose 5.6%.

Mainland China’s property index gained nearly 2%.

Evergrande was once China’s top-selling developer yet is now reeling under more than $300 billion of debt, prompting government officials to come out in force in recent days to say the firm’s problems will not spin out of control and trigger a broader financial crisis.

The string of official reassurances are likely aimed at soothing investor fear that the developer’s debt crisis could ripple through China’s broader property sector, which contributes around a quarter to the country’s economic growth.

Since the government started clamping down on corporate debt in 2017, many real estate developers have turned to off-balance-sheet vehicles to borrow money and skirt regulatory scrutiny, analysts and lawyers said.

Statements from other property developers on Thursday exacerbated investor concern of contagion.

Chinese Estates Holdings Ltd said it would book a loss of $29 million in its current fiscal year from the sale of bonds issued by property developer Kaisa Group Holdings Ltd.

Modern Land (China) Co Ltd said it had ceased to seek consent from investors to extend the maturity date of a dollar bond due on Oct. 25. Its shares were suspended from trading on Thursday.

While Chinese high-yield spreads, as indicated in an index of Chinese corporate high-yield issuers, continued to narrow as of Wednesday evening U.S. time, Modern Land’s decision weighed on investors’ mood, said Clarence Tam, fixed income portfolio manager at Avenue Asset Management in Hong Kong.

“The market is worried all single-B companies will choose not to pay,” he said.

(Reporting by Clare Jim in HONG KONG and Andrew Galbraith in SHANGHAI, additional reporting by Anshuman Daga in SINGAPORE; Writing by Anne Marie Roantree; Editing by Jacqueline Wong and Christopher Cushing)

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Tesla says new factories will need time to ramp up, posts record revenue

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Tesla Inc said on Wednesday its upcoming factories and supply-chain headwinds would put pressure on its margins after it beat Wall Street expectations for third-quarter revenue on the back of record deliveries.

The world’s most valuable automaker has weathered the pandemic and the global supply-chain crisis better than rivals, posting record revenue for the fifth consecutive quarter in the July-to-September period, fueled by a production build-up at its Chinese factory.

But the company led by billionaire Elon Musk faces challenges growing earnings in coming quarters due to supply chain disruptions and the time required to ramp up production at new factories in Berlin and Texas.

“There’s quite an execution journey ahead of us,” Chief Financial Officer Zachary Kirkhorn said, referring to the new factories.

Price fluctuations of raw materials such as nickel and aluminum had created an “uncertain environment with respect to cost structure”, he added.

Even so, he said Tesla was “quite a bit ahead” of its plan to increase deliveries by 50% this year.

“Q4 production will depend heavily on availability of parts, but we are driving for continued growth,” he said.

Tesla shares, up about 23% this year, were down about 0.6% in extended trade late on Wednesday.

Musk himself was not present on the quarterly earnings call for the first time, a development that may have disappointed those investors keen to hear the celebrity CEO’s latest thoughts.

Third-quarter revenue rose to $13.76 billion from $8.77 billion a year earlier, slightly beating analyst expectations according to IBES data from Refinitiv.

Tesla’s automotive gross margin, excluding environmental credits, rose to 28.8%, from 25.8% the previous quarter.

Tesla’s overall average price fell as it sold more lower-priced Model 3 and Model Y cars, but it raised prices in the United States.

The company posted robust sales in China, where its low-cost Shanghai factory has surpassed the Tesla factory in Fremont, California, in terms of production.

Tesla also said it intended to use lithium iron phosphate (LFP) battery chemistry, which is cheaper than traditional batteries but offers lower range, in entry-level models sold outside China. Analysts said this would help keep costs down and address shortages.

It expected the first vehicles equipped with its own 4680, bigger battery cells to be delivered early next year, although it did not say which model would be fitted with them. Musk said in September last year that using its own cells would let Tesla offer a $25,000 car in three years.

In the third quarter, Tesla posted $279 million in revenue from sales of environmental credits, the lowest level in nearly two years. The company sells its excess environmental credits to other automakers that are trying to comply with regulations in California and elsewhere.

 

(Reporting by Hyunjoo Jin in San Francisco and Subrat Patnaik in Bengaluru; Editing by Matthew Lewis and Stephen Coates)

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