On May 29, 2020, Ontario passed Regulation 228/20 under the Employment Standards Act ("ESA"). During the pandemic, many businesses were forced to close and were faced with an impossible situation. According to the Financial Accountability Office of Ontario, approximately 2.2 million Ontario employees have experienced temporary layoffs, job losses or reduced hours in 2020.
However, under the ESA if a temporary-lay off runs longer than 13 weeks in any period of 20 consecutive weeks it is considered a deemed termination and the employee would be entitled to termination pay and severance pay (a longer layoff of up to 35 weeks in a period of 52 consecutive weeks is permitted if certain criteria are met). Under Reg 228/20, businesses are no longer required to pay the termination pay and severance pay to their employees, pursuant to the ESA, due to these types of deemed terminations.
As a result of this new regulation, non-unionized workers who had their hours reduced or eliminated are deemed retroactively to be on Infectious Disease Emergency Leave, which is an unpaid, job-protected leave under the ESA. Affected workers will remain employees and will also remain eligible for federal emergency income support programs. The regulation applies retroactively from March 1, 2020, and will expire 6 weeks after the state of emergency ends.
Also, Section 7 of the regulation states that a temporary reduction or elimination of an employee's work hours due to COVID-19 will not constitute constructive dismissal during the COVID-19 period. Further, in accordance with section 8, complaints filed with the Ministry of Labour due to a reduction or elimination of work hours "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" and was related to COVID-19.
However, Regulation 228/20 does not alter the common law with respect to constructive dismissal, as it relates to temporary layoffs under the ESA. Currently, it is well-established law that the employer does not have a common law right to temporarily lay off an employee, even if the employer complies with the provisions of the ESA. Typically, in order for the common law to be altered by statute, there would need to be express language in the statute to that effect, which is not the case here. How the Court will interpret and apply Reg 228/20 remains to be seen The courts may still find that employees have been constructively dismissed at common law, but they may award less generous severance package to employees. The specific facts which resulted in the temporary layoff or reduction in hours will also be relevant.
Key Takeaway for Employers:
Employers will not be obligated to pay out hefty sums for severance pay and termination pay under the ESA while the state of emergency is still ongoing and 6 weeks thereafter. However, if an employee has already been given a written notice of termination between March 1, 2020, and May 29, 2020, they will not automatically deemed to be on infectious disease emergency leave. Finally, this regulation does not bar employees from pursuing an action in common law and it is unclear at this stage how courts will interpret and apply this regulation.
Key Takeaway for Employees:
Employees will no longer be able to claim termination and severance pay pursuant to the ESA once the temporary lay-off period under the ESA ends. They now also cannot file a complaint with the Ministry of Labour as it will automatically be dismissed if the elimination or reduction of hours was due to COVID-19. However, employees can still proceed with claims in the civil courts pursuant to the common law.
Originally published 02 June 20
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.