We are writing with good news.  On Friday, May 29, without fanfare or publicity, the Ontario Government filed a new Regulation (O. Reg 228/20) under the Employment Standards Act, 2000 (“ESA”), which significantly impacts employers that had to lay employees off or reduce their hours of work or wages as a result of COVID-19.  This Regulation will provide welcome relief to many of our clients.

We have previously written about the newly-established Infectious Disease Emergency Leave (“IDEL”) under the ESA, which is a job-protected leave that was made available to employees who were unable to work as a result of certain reasons related to COVID-19.  Some employees, however, were not eligible for IDEL and their employers were not able to maintain their employees’ hours or wages, which resulted in many employees being temporarily laid off or having their income reduced.  For employers who temporarily laid off in March, your employees are (spoiler alert-were) coming up to the end of the temporary layoff period, which has led to some worry recently.  For employers who reduced hours or wages, some of you have received complaints about constructive dismissal.  This new Regulation provides reprieve from both concerns.  Specifically, the Regulation deems employees whose wages or hours of work were temporarily reduced or eliminated by their employer for reasons related to COVID-19 to be on an IDEL for the duration of “the COVID-19 period.”  The COVID-19 period runs from March 1, 2020 until six weeks after the day that the emergency declared by Order in Council 518/2020 on March 17, 2020 pursuant to section 7.0.1 of the Emergency Management and Civil Protection Act is terminated or disallowed.

The Regulation also provides that a layoff or a temporary reduction in hours or wages for reasons related to COVID-19 does not constitute constructive dismissal if the change occurred during the COVID-19 period.

These new provisions do not apply to unionized employees. 

WHAT DOES THIS MEAN?

Employees who were laid off or whose wages or hours were reduced because of reasons related to COVID-19 are now deemed to have been on the IDEL. 

Many employers that implemented layoffs (including those that reduced employee hours to less than 50% of their regular work week) were approaching the 13/20 or 35/52 week timelines applicable to temporary layoffs.  Before this Regulation came into effect, employees on a temporary layoff would be considered to have been dismissed as of the first day of the temporary layoff if the layoff lasted for more than 13 weeks in a 20-week period.  This Regulation has altered that.  Employees are now deemed to have never been temporarily laid off in the first place, so the clock never started ticking.  Instead, they are considered to have been on IDELs retroactively.   

A further concern that some employers have been discussing with us, those that unilaterally laid off or reduced the wages or hours of their employees due to COVID-19, was the potential for claims of constructive dismissal due to the changes.  If the employer did not have (or obtain by agreement) the right to lay off employees, then the employees could claim that the reduction of wages or work hours or the imposition of a temporary layoff was a fundamental change to their terms of employment, resulting in a constructive dismissal.  This Regulation precludes that, as it explicitly states that a temporary reduction or elimination of an employee’s hours of work or wages for reasons related to COVID-19 is not a constructive dismissal.

What this also means, going forward, is that employers that need to temporarily reduce hours or wages (or temporarily lay employees off) will now be deemed to be placing those affected employees on IDELs, will not be considered to have temporarily laid off these employees, and will not be deemed to have constructively dismissed these employees.

OTHER NOTABLE IMPACTS

To address the implications that the retroactivity of this Regulation has, the Regulation also prescribes as follows:

• an employee deemed to be on IDEL because of this Regulation does not have to have given the employer notice of the leave;
• if an employee stopped participating in a benefit plan as of May 29, 2020, then the employee does not continue to participate in the benefit plan (as would otherwise have been required) during the remainder of the IDEL period;
• if an employer had stopped, by May 29, 2020, making its contributions for a benefit plan that is related to an employee’s employment, then the employer is not required to continue to make its contributions for the remainder of the IDEL period; and
• all other terms of the IDEL leave apply (e.g. right to reinstatement at the end of the IDEL, no reprisal).

TERMINATIONS PRIOR TO MAY 29

Terminations that took place after March 1and prior to May 29, 2020, whether by direct action or by deemed dismissal under the ESA, continue to be effective.  If an employer has given notice of termination, then the employee is not considered to be on an IDEL unless the employer and employee agree to withdraw the notice of termination.

PERIOD OF APPLICATION

The provisions described above apply for the period beginning March 1, 2020 and ending six weeks after the March 17, 2020 emergency declaration is terminated or is disallowed.

Please do not hesitate to reach out to us with any questions on this matter.

Keep safe.

The Labour & Employment Team at Cunningham Swan.