Ontario Government Attempts to Help Employers by Bolstering Lay Offs

New Regulation Has Hang Ups: Infectious Disease Emergency Leave, O Reg 228/20

In the midst of the novel Coronavirus disease (COVID-19) pandemic, employers have been raising concerns that the temporary layoff and termination provisions of the Employment Standards Act, 2000 (the “ESA”) are ill suited to address the circumstances they are facing. Meanwhile, many employees have been laid off from work and forced to elect to agree, acquiesce or object to temporary layoffs and assert that they have, in effect, been constructively dismissed from their jobs. Constructive dismissal is a unilateral change to an employment contract by the employer.

As the Ontario state of emergency is repeatedly extended – most recently until June 30, 2020 – employers continue to struggle to manage their workforce while enduring significant revenue losses. Meanwhile, employees continue grapple with difficult decisions about their livelihood and volatile job security.

The provincial government has attempted to respond to these concerns.

New Regulation

On May 29, 2020, the Government of Ontario introduced the Infectious Disease Emergency Leave, O Reg 228/20 (the “Regulation”). The Regulation replaces the previous Infectious Disease Emergency Leave Regulation (O Reg 66/20) and amends the ESA provisions regarding the recently introduced infectious disease emergency leave, layoffs, constructive dismissals and automatic terminations. The Regulation applies mainly to non-unionized employees.

“The Ontario government is taking steps to help ensure that as the economy gradually and safely reopens workers will have jobs to return to and businesses will be protected from incurring unsustainable termination costs,” the government stated in a press release.

The COVID-19 Period

Firstly, the Regulation creates a “COVID-19 period” from March 1, 2020 to six weeks after the current declaration of emergency in Ontario ends. Given the province’s announcement on June 2, 2020 to extend the declaration of emergency to June 30, 2020, the COVID-19 period will expire on August 11, 2020 at the earliest.

Infectious Disease Emergency Leave

The Regulation deems non-unionized employees, whose hours of work or wages were temporarily reduced or eliminated during the COVID-19 period for reasons related to COVID-19, to be on infectious disease emergency leave (“IDEL”) retroactively from March 1, 2020 onwards. The IDEL, which was introduced on March 19, 2020 through an expansion of the emergency leave provisions of the ESA, entitles an employee to an unpaid leave of absence in instances where the employee is unable to work for a broad range of COVID-19 related reasons.

Protections to employees on IDEL such as the right to reinstatement, will apply during the COVID-19 period with some exceptions.

Temporary layoffs not deemed a termination or constructive dismissal

The Regulation provides that a temporary reduction or elimination of hours or a reduction of wages during the COVID-19 period for reasons relating to COVID-19 does not amount to a termination, severance or constructive dismissal for the purposes of the ESA.

The Regulation also allows for temporary layoff to exceed the prescribed length of 13 weeks or 35 weeks under the ESA during the COVID-19 period without amounting to termination, subject to some exceptions.

Employees who were already given written notice of termination during the COVID-19 period will not be considered to be on IDEL unless both the employer and employee agree to withdraw the notice of termination.

Apparent purpose of the Regulation

The government appears to have tried to ‘hit the pause button’ on various ESA layoff, termination and severance provisions in response to the COVID-19 emergency, but it may have missed the mark. By placing many employees on deemed IDEL, some of whom will continue to work on a reduced basis, the Regulation appears to have created confusion and uncertainty.

Manner in which the Regulation was introduced

That the Regulation may have been introduced hurriedly without warning or consultation is no surprise, given present circumstances and given that 13 weeks from the start of the COVID-19 emergency was about to elapse in mid-June. Again, the 13-week mark is significant because the general ESA rule is that a temporary layoff will automatically crystalize into a termination after 13 weeks of layoff in any consecutive 20-week period.

Scope of the Regulation

It is clear that the Regulation limits certain employment standards complaints based on termination due to layoff and constructive dismissal. In fact, complaints already filed with the Ministry of Labour arising from temporary reduction or elimination of an employee’s hours of work or a temporary reduction in an employee’s wages by an employer are “deemed not to have been filed”, provided that the reductions occurred in the COVID-19 period for reasons relating to COVID-19.

Common law constructive dismissal or breach of contract law suits decided by the courts are probably still viable, as the ESA generally does not affect civil remedies of employees against their employers. In other words, an employee’s minimum statutory entitlements to termination and severance pay may be limited, but overlapping and often greater entitlements may be awarded by the courts.

Uncertainty surrounding the end of the COVID-19 period

Again, the Regulation is primarily temporary in nature. The bulk of the provisions last only until six weeks after the COVID-19 state of emergency is lifted in Ontario. After that time, the standard protections of the ESA will re-engage. Employees placed on deemed IDEL will also be afforded the additional protections applicable to ESA leaves. More specifically, employees on an ESA leave, such as the IDEL, are entitled to be reinstated to the position they most recently held, if it exists, or to a comparable position, if it does not. The obligation to reinstate an employee does not apply, however, if the employment relationship was ended solely for reasons unrelated to the leave. It remains to be seen what dismissals may now be in breach of the protections of the ESA for a deemed IDEL.

The lack of clarity is not likely to be resolved in the near future. Presently, court procedural deadlines are effectively on hold and, in the pre-COVID-19 circumstances, it often took years to get to trial. Prior to partial court closures, summary judgment decisions usually took several months to be issued and those are limited to cases where the facts are straightforward enough to be decided without a full trial.

It appears that there will be upheaval and litigation arising from layoffs, constructive dismissals and outright terminations following the COVID-19 period, but those will occur no sooner than August 11, 2020.

In the meantime, employees and employers will need to pay close attention to the dates of layoffs, reductions in working hours/wages and dismissals etc., as there are now a host of triggering dates under the Regulation with various consequences.

Analysis by an employment lawyer of each specific set of events will be necessary to determine what an employee’s entitlements may be. If you have questions about layoffs, constructive dismissals or the changes to the new Infectious Disease Emergency Leave, contact Zubas + Associates. Call us at 416-593-5844 or send an email to info@employment-lawyers.ca.