The Canadian Quarantine Act and its consequences for directors and officers in the COVID-19 era
(Updated July 1st, 2020)
Slowly but surely, various governments are relaxing COVID-19 related measures. However, we are not there yet. Domestic corporations, foreign subsidiaries, and their directors and officers (“D&O”) still have to be very careful when traveling to this country, and particularly when the latter are not Canadian residents.
March 25 last, the Public Health Agency of Canada (“PHAC”) announced a first Emergency Order issued under Section 58 of the Quarantine Act to minimize the risk of exposure to COVID-19 in Canada. A second Emergency Order was issued on April 14 to further increase measures. On June 29, a third Emergency Order was issued, replacing the second Emergency Order to extend the measures until August 31.
The Order regulates the entry into Canada by providing rules to be followed by every person entering the country, which includes the obligation to answer any questions asked by screening officers, the obligation to wear a mask upon entry in the country and while in transition to isolation or quarantine, but more importantly, the obligation for all travellers to quarantine for a period of 14 days following their arrival date.
The Quarantine Act applies to individuals, but also to corporations. Indeed, under this legislation, the directors, officers, agents or mandataries of a corporation are responsible of ensuring compliance to the provisions of the Act by all of their representatives. The Act further states that these persons shall be held personally liable of any offence to the Act, as appears at Subsection 73. Any such person, as well as any individual who contravenes Subsection 58 or 73 (i.e.: to any Emergency Orders adopted under the Act), are subject to a maximum fine of $750,000, to imprisonment for a term of not more than six months, or both.
Therefore, it is euphemistic to state that failure to heed these Emergency Orders could have dire effects on D&Os, regardless country of residence. Many subsidiaries are managed by D&Os residing outside of Canada. These obligations are unfettered by this fact, as the issue of residence is not likely to serve as grounds of defense, nor a mitigating factor when fines or imprisonment are considered. The obligation is an active one since there is a presumption that the D&Os are guilty of an offence when it is committed by the corporation’s employee, agent or mandatary. The only way to rebut this presumption is to convincingly show that the employee, agent or the mandatary has committed the offence without their knowledge and that they exercised all due diligence to prevent its commission. In the case where D&Os reside abroad, the first part of the presumption is likely to be easier to rebut, but adducing compelling evidence that due diligence was exercised will remain complicated.
The Act does not provide any guidelines on how to comply with this obligation. In the unprecedented context that the COVID-19 brings and in regard of the Emergency Orders issued under the Act, how can D&Os respect their obligations? Consequently, we urge D&Os to implement detailed and comprehensive policies to insure that the corporation and its employees comply with their new obligations. Here is a non-exhaustive list of some measures that should, in our view, be integrated in such policy:
- Inform your employees on the COVID-19 situation and on their obligations and yours. Make them aware of the harmful consequences of not respecting the Quarantine Act or the Emergency Orders adopted under it. Reliable communication channels dedicated to COVID-19 should be established, so that everyone can share the latest and most pertinent information.
- Suspend all unnecessary travels. Also limit, when possible, in-person activities. Prioritize remote-working, phone calls with clients and video conference meetings.
- If your employees return from abroad, do not allow them to enter the workplace. Be flexible and accommodate them by either letting them work from home and if it is not possible, compensate them for the period of their quarantine.
- Support your employees who are in quarantine. You could do so by bringing them work supplies and equipment (if they can work from home), providing them with food, medication, soap, disinfecting gel and other necessities.
- Monitor the health of your employees. Report any symptoms to local public health officials.
- Report any violation to the Quarantine Act on by a coworker in quarantine or isolation to local law enforcement. This includes workers that do not respect the mandatory quarantine period. It is suggested that employees be afforded some form of whistle-blower protection when reporting any violation by their colleagues.
- Stay informed. Make sure to comply, at all times, with applicable federal and provincial/territorial employment and health and safety laws.
In addition, in the province of Quebec, the CNESST (Quebec Occupational Health and Safety Commission) regularly posts and updates guidelines and toolkits to help employers “ guarantee that operations can resume or continue under the safest and healthiest possible conditions in the context of COVID-19.” A visit to their website can be a good start.
In conclusion, corporations and D&Os who do business abroad, who manage travelling employees or are used to receive foreign clients and partners in Canada shall more than ever have to act carefully and diligently. The consequences of not doing so may be serious and even extreme, first and foremost, for the lives that could be endangered, and, secondly, for D&Os who could be fined and/or imprisoned. As mentioned previously, this applies to D&Os of Canadian corporations who reside outside of Canada as well.
Feel free to contact the YULEX team if you have any questions.
For the sake of simplicity, we use the term corporation to refer to any Canadian, provincial or foreign corporations owned by Canadian residents or foreigners, including subsidiaries based in Canada.