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COVID-19 Update: New Ontario Regulation Amends Application of ESA Termination and Temporary Layoff Provisions

As businesses across the country were forced to shut their doors in the name of public health, many employers grappled and continue to grapple with implications of putting employees on a temporary layoff.  In Ontario, the Employment Standards Act, 2000 (“ESA”) permits employers to temporarily lay off employees for specified periods of time without triggering a statutory termination of employment. As the end of shortest such allowable layoff period drew near, employers and legal practitioners alike have been calling on the Ontario government to follow in the footsteps of jurisdictions like Manitoba and British Columbia to amend the ESA to reflect our current reality.

On May 29, 2020, the Ontario government published O. Reg. 228/20: Infectious Disease Emergency Leave under the ESA. In what is sure to be welcome news for employers province-wide, this Regulation temporarily amends the treatment of layoffs under the ESA during the COVID-19 pandemic and, in doing so, avoids the wave of deemed terminations that had been looming on the horizon. The changes prescribed in the Regulation will apply during the “COVID-19 period” defined as the period from March 1, 2020 until six (6) weeks after Ontario’s emergency order is lifted.

The Regulation retroactively deems non-unionized employees whose hours of work or wages have been temporarily reduced or eliminated for reasons related to COVID-19 on or after March 1, 2020 to be on “infectious disease emergency leave”. As we previously blogged here, infection disease emergency leave is an unpaid, job-protected leave that was introduced on March 19, 2020. Employers are exempt from the obligation to continue benefit contributions for employees deemed to be on infections disease leave, if the employer was not making such contributions prior to May 29, 2020.

Employees who were dismissed or permanently laid off after March 1, 2020, or have already been provided with notice of termination by their employer, will not be deemed to be on infectious disease emergency leave under the Regulation.

Importantly, the Regulation explicitly provides that a temporary reduction or elimination in hours of work or wages for reasons related to COVID-19 is not a layoff, termination, or constructive dismissal under the ESA for non-unionized employees, even if the reduction continues beyond the permissible temporary layoff period. As a result, complaints made under the ESA alleging termination as a result of a reduction or elimination of hours or wages related to COVID-19 will be deemed to not have been filed. Unlike the deemed infections emergency leave outlined above, however, this element of the Regulation is not retroactive and any layoffs that exceeded the ESA temporary layoff period prior to May 29, 2020 will be considered terminations.

What still remains to be seen is whether a temporary layoff during COVID-19 in the absence of a specific contractual term in an employment agreement or past practice of laying off will be found to be a constructive dismissal under the common law despite this new Regulation.  Another blog for another day!

The lawyers at CCPartners are available to assist you in planning for the return of your workforce to ensure that you are prepared to operate safely and to help ensure that you meet all of your obligations. Click HERE for a link to CCP’s COVID-19 Blog series, catch our webinars and podcasts on YouTube and SoundCloud, or wherever you listen to podcasts, or contact any of our team members to answer you workplace questions.


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