Ontario Government Extends Protections for Temporary Layoffs to January 2, 2021

On September 3, 2020, Ontario’s government announced that it would extend layoff protections, preventing temporary layoffs due to COVID-19 from automatically becoming terminations of employment.

In normal circumstances, the Ontario Employment Standards Act, 2000 (ESA) provides that employees may be temporarily laid off for up to 13 weeks in a period of 20 consecutive weeks, or, where certain criteria are met, for up to 35 weeks in a period of 52 consecutive weeks. Exceeding these time limits results in a permanent termination of employment, triggering an employer’s obligation to pay statutory termination and severance pay.

However, as it became clear that the COVID-19 pandemic would have a lasting impact on business, the Ontario government sought to preserve employment relationships by “freezing” the clock for temporary layoffs. In May 2020, Ontario Regulation 228/20 “Infectious Disease Emergency Leave” came into force, providing that an “employee whose hours of work are temporarily reduced or eliminated by the employer, or whose wages are temporarily reduced by the employer,” for reasons related to COVID-19, would not be considered laid off for the “COVID-19 period.”

The “COVID-19 period” had been scheduled to end on September 4, 2020. However, Ontario Regulation 492/20, which amends Regulation 228/20, now extends the COVID-19 period to January 2, 2021. As a result, employees who are temporarily laid off will continue to be deemed to be on Infectious Disease Emergency Leave during the COVID-19 period. Upon completion of the COVID-19 period, the deemed leave will come to an end and, if the employee remains off work, the clock for temporary layoffs will effectively reset.

In addition, Regulation 228/20 continues to provide that during the COVID-19 period a temporary reduction of wages, or a temporary reduction or elimination of hours of work, for reasons related to the pandemic will not constitute constructive dismissal for the purposes of the ESA.

The provisions regarding temporary layoff, or the temporary reduction of wages or hours of work, do not apply to unionized employees. Key points for employers to consider include the following:

• Following a statutory leave of absence, an employer is required to reinstate the employee to his or her former job position, if it still exists, or to a comparable position. However, a laid-off employee who is discharged after March 1, 2020, because the employer is unable to continue employing the individual, is not considered to be on an Infectious Disease Emergency Leave under Regulation 228/20. Accordingly, the deemed leave of absence does not necessarily preclude an employer from terminating an individual’s employment.
• Employees who are on Infectious Disease Emergency Leave because they need to stay home to isolate, quarantine, or take care of family members due to COVID-19 will continue to have job protection under the ESA. Although the ESA was not entirely clear on staying home due to schooling requirements, the Ontario government has taken the position that the leave provisions include parents who decide not to send their children back to school due to concerns about COVID-19.
• Regulation 228/20 does not change the common law rights of employees. How the courts may approach constructive dismissal in light of these regulatory amendments remains to be seen.

The extension of the deemed leave-of-absence provisions is a positive development for employers and employees who wish to preserve their employment relationship in the hopes that business needs will eventually return to normal. However, the interplay between statutory and common law obligations, as well as COVID-19-related benefit programs (e.g., the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Response Benefit (CERB) programs) can be complex.

Ogletree Deakins will continue to monitor and report on developments with respect to the COVID-19 pandemic and will post updates in the firm’s Coronavirus (COVID-19) Resource Center as additional information becomes available. Important information for employers is also available via the firm’s webinar programs.