Further Amendments to the ESA: Timer Still Paused on Layoffs

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On September 3, 2020, the Ontario government announced that it was extending the protections it introduced in June through Ontario Regulation 228/20 until January 2, 2021. This is great news for businesses, many of whom were scrambling to recall their employees to work or make other arrangements before September 4, 2020, when the original “COVID-19 Period” was set to expire.

What are the Changes?

We provided a detailed summary of Ontario Regulation 228/20 when it was first introduced. To recap, this Regulation made a number of important changes to the Employment Standards Act, 2000 (the “ESA”). First, that a temporary reduction or elimination of an employee’s work hours or wages for reasons related to COVID-19 would not be considered a constructive dismissal pursuant to the ESA. Second, any employee who did have their hours or wages reduced or eliminated was retroactively deemed to be on Infectious Disease Emergency Leave. According to the Regulation, these changes were to last during the “COVID-19 Period”, which was originally defined as the period from March 1, 2020 until six weeks after Ontario’s emergency order was lifted. 

Prior to September 3, this meant that these changes would have expired as of September 4, 2020. Now, the government has redefined the COVID-19 Period as the period from March 1, 2020 through to January 2, 2021.

What Does this Mean for Employers?

Before Regulation 228/20, the ESA set out clear time limits for temporary layoffs. Employers could place employees on a temporary layoff for a maximum of 13 weeks (within a 20-week period). If employers met certain conditions, such as continuing an employee’s benefits during the layoff period, the layoff could be extended to up to 35 weeks in a 52 week period. Within these time limits, an employee could remain on temporary layoff without it being a termination. However, if the employee was not recalled to work prior to the end of these periods, their employment would be deemed to be terminated as of the first day of the layoff, triggering an employee’s entitlements to notice/Termination Pay and Severance Pay under the ESA.

Now, these time limits will not begin to run until after the COVID-19 Period ends on January 2, 2021. This means that employers who are not able to recall their employees to work, or return them to their regular hours/wages, at this time, do not need to worry about deemed terminations under the ESA, the costs of which can be substantial. Instead, these employees will continue to remain on Infectious Disease Emergency Leave.

Can an Employee Still Pursue a Claim for Constructive Dismissal at Common Law?

The changes to the ESA do not necessarily mean that an employee who has been told to remain at home or had their hours or wages reduced without their consent has no recourse. Although the Regulation clearly removes the right of an employee to claim constructive dismissal under the ESA, it does not explicitly remove an employee’s right to pursue a claim of constructive dismissal at common law.

For this reason, we continue to recommend that employers obtain the consent of employees before laying them off or reducing their hours or pay and, in the future, be proactive by including temporary layoff provisions in their contracts.

As an employer or an employee, it is essential that you have a clear understanding of your rights and obligations. We can help you to make informed decisions, so please contact us and get the advice you need.

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