On September 3, 2020, the Ontario government extended the period during which employers can temporarily lay off non-unionized employees for reasons related to COVID-19 without it being deemed a termination of employment. This is a major development that will give many Ontario employers struggling to recover from the business impact of COVID-19 more time before recalling their employees to work.
As many employers know and as addressed in our earlier blog post, in late May the provincial government temporarily changed the rules relating to temporary layoffs under the Employment Standards Act, 2000 (“ESA”). Generally, the ESA provides that employees can be temporarily laid off for up to 13 weeks in a 20-week period or 35 weeks in a 52-week period, depending on the circumstances, after which time their employment is deemed to be terminated if the layoff continues. However, the government effectively “paused” layoffs when it enacted the Infectious Disease Emergency Leave regulation (the “Regulation”) in late May. The Regulation temporarily deemed employees who had been laid off to instead be on a statutory Infectious Disease Emergency Leave (“IDEL”), rather than on layoff. This meant that during the period when the Regulation was in effect, legally, employees who had been laid off since March were no longer considered to be on a temporary layoff, and the usual rules pertaining to the duration of layoffs temporarily did not apply.
The period during which employees who had been laid off were deemed to be on an IDEL rather than layoff was scheduled to end on September 4, 2020, after which the usual rules related to layoff durations were scheduled to come into effect. However, at the eleventh hour—on September 3—the government amended the Regulation and extended the temporary rules until January 2, 2021.
What was the Change?
To extend these temporary rules, the government amended the definition of “COVID-19 period” in the Regulation to mean the period beginning March 1, 2020 and ending on January 2, 2021. Consequently, where non-unionized employees experience a reduction in hours or wages for reasons related to COVID-19 during the COVID-19 period, they will continue to be deemed to be on an IDEL and not laid off until January 2, 2021. The Regulation originally deemed such employees to be on an IDEL and not laid off for the purposes of the ESA from March 1, 2020 until six weeks after Ontario’s state of emergency ended. As Ontario’s state of emergency ended on July 24, 2020, this rule was originally set to expire on September 4, 2020.
What does the Change Mean?
Employers are now able to continue laying non-unionized employees off for reasons related to COVID-19 until January 2, 2021 without triggering the ESA’s limits on the duration of layoffs. This is because such employees will by law be considered to be on an IDEL rather than a layoff, even though they were effectively laid off. As a result, time during which employees are “laid off” during the COVID-19 period will not count towards the maximum duration for layoffs under the ESA. Rather, where employees’ temporary layoffs extend beyond January 2, 2021, their layoff will be deemed to commence on January 3, 2020. After that time, the regular layoff time period limits would apply, as set out above.
This amendment is great news for employers because they will be able to keep employees on temporary layoffs until January 2, 2021 for reasons related to COVID-19 without that time being counted towards the ESA limits on the maximum length of temporary layoffs and without the employees’ employment being deemed to be terminated. Consequently, employers are now able to lay non-unionized employees off for longer than they would otherwise be allowed to under the ESA.
However, employers should continue to be mindful of the significant risks they still may face as layoffs continue. Employers generally need to reserve the right to temporarily lay employees off in an employment contract. Where there is no such layoff clause in an employment contract, a layoff of any duration will generally amount to constructive dismissal, regardless of whether the ESA’s temporary layoff rules are followed. As we addressed in our earlier blog, there is uncertainty about whether the Regulation has changed that general rule, and that uncertainty has not yet been clarified by the courts. As such, there continues to be a risk that employers that lay employees off without the right to do so in an employment contract will be found to have constructively dismissed the employees and will be ordered to pay out their common law reasonable notice termination entitlements.
As the months that employees remain off work due to layoffs pass, the risk that employees will become impatient and pursue constructive dismissal claims against their employers will increase. As such, employers with employees who remain temporarily off work should consider not only the extension to the temporary changes to the ESA’s layoff rules but also the risk of constructive dismissal claims as they manage their workforces.
As always, we will monitor the progression of COVID-19 related measures affecting employers and post further updates as they become available to keep you In the Know.
This blog is provided as an information service and summary of workplace legal issues. This information is not intended as legal advice.