Welcome News for Employers: Ontario Introduces Regulation 228/20

On Friday afternoon, the Ontario government introduced a new Regulation that has the potential to dramatically affect the legal landscape with respect to non-unionized workers that have had their hours reduced or been temporarily laid off. 

While there is ongoing debate regarding the specific implications of the Regulation, it is clearly good news for employers. Among other things, it will avoid the mass of deemed terminations that would have occurred when temporary layoffs exceeded thirteen weeks, which was coming up fast for many employers and causing significant consternation.

Ontario Regulation 228/20, which does not even have a name (it is listed as “undefined”), was enacted under the Employment Standards Act, 2000 (“ESA”) and came into place without fanfare and stayed below the radar briefly, until members of the Employment Law Bar learned of it and began debating exactly how extensive its impact will be. The answer to that is still not entirely clear.

What we do know is that:

  1. Employees who have had their hours or pay reduced or eliminated due to COVID-191 will be retroactively deemed to be on Emergency Leave;
  2. As a result, such employees are generally entitled to a continuation of their employment-related benefits2 and to be reinstated to their job when the Leave ends;
  3. This does not apply to an employee that was already dismissed, permanently laid off3 or provided with notice of termination under the ESA before May 29, 2020; and
  4. Moving forward, a temporary reduction or elimination in hours of work or wages due to COVID-19 is not a layoff, termination, or constructive dismissal under the ESA, even if it extends beyond the time allowed for temporary layoffs under the statute.

Note that these changes are temporary, and apply throughout the “COVID-19 period”, which has been defined as the period from March 1, 2020 until six weeks after Ontario’s emergency order is lifted.

As a result, employees have lost some remedies, including the ability to bring certain claims through the Ministry of Labour. As discussed below, this does not eliminate common law rights which can be enforced through an action in civil court.

Any complaint that had already been filed with the Ministry alleging that a temporary reduction or elimination of hours or wages constituted a termination “shall be deemed not to have been filed if the temporary reduction or elimination of hours or the temporary reduction in wages occurred during the COVID-19 period for reasons related to the designated infectious disease”.

No More Worries about Thirteen Week Limit on Temporary Layoffs

This will be a welcome relief for many employers, who can stop counting days on the calendar. The temporary layoffs they imposed are now deemed to be Emergency Leaves, and the time limits which can result in a deemed termination will no longer apply. Other provinces have taken similar steps, and our team had speculated that Ontario would follow suit as the pandemic dragged on. 

No Constructive Dismissals under the ESA

The other aspect of this Regulation that is getting a lot of attention is the reference to constructive dismissal. I have very publicly and frequently commented that many of the businesses that have temporarily laid off employees did not have the legal right to do so, and that many of those layoffs were actually constructive dismissals. I have also said that this put a lot of employers in an impossible position, and that it is likely the law would have to change or adapt to these unprecedented circumstances.

Pursuant to the common law, there is little question that a temporary layoff, without a contractual right to impose one or the agreement of the employee, is a constructive dismissal. The ESA also addresses constructive dismissal, providing that a 

“termination” occurs for the purpose of entitlement to statutory notice of termination (or termination pay) if “the employer constructively dismisses the employee and the employee resigns from his or her employment in response to that within a reasonable period”

However, the new Regulation states the following:

7(1) The following does not constitute constructive dismissal if it occurred during the COVID-19 period:

  1. A temporary reduction or elimination of an employee’s hours of work by the employer for reasons related to the designated infectious disease.
  2. A temporary reduction in an employee’s wages by the employer for reasons related to the designated infectious disease.

Does This Also Change The Common Law Regarding Constructive Dismissal?

The Regulation clearly removes the right to claim constructive dismissal under the ESA due to a temporary reduction or elimination of hours due to COVID-19. Some have argued that it goes further, and that the Ontario government has changed decades of common law with one short Regulation. While I agree that it is hard to reconcile someone being on a Leave of Absence under the ESA while at the same time being deemed to have been constructively dismissed pursuant to common law, I do not believe that this Regulation was intended to impose such a dramatic change on workers’ rights. If it was, it would have done so in a more explicit manner, so there was no ambiguity.

The nuances will have to be resolved, but my initial view is that in order to change the common law, the government would have to include explicit wording to that effect, particularly since section 8 of the ESA states that “no civil remedy of an employee against his or her employer is affected by this Act”. 

Takeaways

We are navigating uncharted territory, and the landscape continues to change. While this development is welcome news for employers, the best approach is still to be proactive by including temporary layoff provisions in your contracts or obtaining the consent of employees before laying them off or reducing their hours or pay. We routinely work with employers to develop strategic contracts.

Employees that have had their jobs impacted by COVID-19 should be sure they understand their legal situation, so they do not unintentionally compromise their rights or risk their job. We can help individuals in those circumstances, or any situation where they are unsure of their rights.

The bottom line is what it always is: you should never make decisions without understanding your rights and obligations. We can help you make informed decisions, so please contact us and get the advice you need.

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1 Notably, there is no definition or threshold in the Regulation regarding how much of an impact the pandemic has had on the employer.

2 Unless the employer was not making benefit plan contributions prior to May 29, 2020 for an employee on layoff due to COVID-19.

3 Such as where a temporary layoff has already exceeded the time limits permitted by the ESA.