Significant Changes to Ontario’s ESA: Leaves, Layoffs, and Constructive Dismissal during COVID-19

June 1, 2020

On May 29, 2020, the Government of Ontario filed an amending regulation, O. Reg. 228/20 (the “Regulation”) to the Employment Standards Act, 2000 (“ESA”). The Regulation significantly amends the ESA for the period from March 1, 2020 to the date that is six weeks after the day that the current provincial state of emergency is terminated or disallowed (the “COVID-19 Period”). We have summarized the key changes, and their implications for Ontario employers (not including unionized workplaces, which are largely excluded from the amendments), below.

Expansion of Infectious Disease Leave Entitlement – Reduced or Eliminated Hours of Work

As we previously reported, as of January 25, 2020, the following employees were entitled to job-protected, unpaid infectious disease leave if unable to perform their duties due to COVID-19:

  • employees under individual medical investigation, supervision or treatment;
  • employees acting in accordance with an order under the Health Protection and Promotion Act;
  • employees in quarantine or isolation or subject to a control measure (which may include self-isolation) in accordance with a quarantine, isolation or control measure implemented in relation to COVID-19;
  • employees under a direction given by their employer in response to a concern of the employer that the employee may expose other individuals in the workplace to COVID-19;
  • employees providing care or support to certain designated family members because of a matter related to COVID-19; and
  • employees directly affected by travel restrictions related to COVID-19 who, under the circumstances, cannot reasonably be expected to travel back to Ontario.

The Regulation expands this entitlement to unpaid infectious disease leave to any employee whose hours of work have been temporarily reduced or eliminated by the employer for reasons related to COVID-19, with effect from March 1, 2020. Such employees are deemed to be on infectious disease leave in respect of any time during the COVID-19 Period that they are not performing their duties for that reason. Certain exceptions to the general rules applicable to ESA-protected leaves apply in respect of the deemed leave relating to hours of work/wage reductions.

The Regulation also provides guidance regarding how to determine if an employee’s hours of work or wages have been reduced, depending on whether the employees have a regular work week, have no regular work week, or were not employed by the employer prior to March 1, 2020.

Certain Employees Whose Employment is Terminated or Severed Not Eligible for Infectious Disease Leave

The following individuals (collectively referred to as the “Exempt Individuals”) are not considered to be on infectious disease leave for the reason of having had their hours of work temporarily reduced or eliminated by the employer for reasons related to COVID-19:

  • any employee who has, since March 1, 2020, been given notice of termination in accordance with sections 57 or 58 of the ESA, unless the employer and employee agree to withdraw the notice of termination;
  • any employee who has been dismissed from employment on or after March 1, 2020, or whose employer has otherwise refused or been unable to continue employing them on or after March 1, 2020;
  • any employee who has been laid off because of a permanent discontinuation of all of the employer’s business at an establishment on or after March 1, 2020;
  • any employee who has received notice of termination and who has subsequently resigned on or after March 1, 2020, provided such resignation takes effect during the statutory notice period;
  • any employee whose employment was constructively dismissed and who resigned in response before May 29, 2020; and
  • any employee whose layoff became a deemed termination pursuant to the ESA before May 29, 2020.

Based on the foregoing, unless the employee’s position with the employer falls within another job-protected category, employers remain able to temporarily lay off or expressly terminate the employment of their employees.

Reduction in Hours or Wages Not a Layoff or Constructive Dismissal

The Regulation stipulates that any employee whose wages are temporarily reduced or whose hours of work are temporarily reduced or eliminated for reasons relating to COVID-19, during the COVID-19 Period, are not considered to be laid off. The only exceptions to this rule are in respect of employees laid off due to the permanent discontinuance of their employer’s business at an establishment, and employees whose layoff became a deemed termination before May 29, 2020.

Furthermore, any such temporary reduction of wages or reduction or elimination of hours of work does not constitute a constructive dismissal unless the employee resigned from their employment in response prior to May 29, 2020.

Any employee complaints filed with the Ministry of Labour relating to temporary reductions of hours of work or wages are deemed not to have been filed if the events giving rise to the complaint occurred during the COVID-19 Period for reasons related to COVID-19. There are exceptions to this rule in respect of the Exempt Individuals, described above.

Our Thoughts

The Regulation is a welcome amendment to Ontario employment law for employers, who will maintain flexibility to make necessary adjustments to their workforces and payroll, and whose exposure to constructive dismissal claims will be significantly reduced as a result – though it remains to be seen whether courts will allow claims by employees alleging constructive dismissal from a common law perspective.

Unless an employee has, before May 29, 2020, resigned in response to a reduction to their hours or wages made between March 1 and May 29, 2020, they have now lost their entitlement to ESA remedies, so long as the reduction of their hours or wages is for reasons related to COVID-19.

Furthermore, employers now have breathing room in respect of employees who have been on temporary layoff since on or after March 1, 2020, as they will no longer have to worry about deemed terminations triggering obligations to issue ESA-mandated severance payments and payments in lieu of notice of termination during the COVID-19 Period.

 

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