Ontario - Infectious Disease Emergency Leave and Temporary Layoff

Temporary Layoffs in Ontario

As covered before on this blog, employers may be able to place employees on a temporary layoff, particularly in response to business downturns. However, to do so, the employer must have prior permission in the form of a signed, valid employment contract authorizing temporary layoffs. Without meeting this contractual requirement, an employer who places an employee on a temporary layoff risks a potential claim of Constructive Dismissal.

Under Ontario employment law, a constructive dismissal occurs when an employer makes a significant change to a fundamental term or condition of an employee’s job (e.g., significantly reducing their hours of work or salary) without the employee’s consent. Normally, the employee would have to resign in response to the change within a reasonable period of time in order for the employer’s actions to be considered an lawful termination of employment.

What is the Impact of the Infectious Disease Emergency Leave?

In response to the concerns of business across Ontario, the government recently announced important – but temporary – changes to the Employment Standards Act, 2000 (“ESA“). Now, employers who were forced to temporarily layoff their employees (or reduce their work hours) because of the financial disruptions caused by the coronavirus pandemic, will be able to rely on the “Infectious Disease Emergency Leave” provision of the ESA to avoid having to pay out termination pay and severance pay. This new rule applies retroactively to all temporary layoffs since March 1, 2020.

Under the ESA, if an employee is put on a temporary layoff for more than 13 weeks without pay and benefits (or 35 weeks if they continue receiving benefits), the employer is considered to have terminated the employee’s employment and they would generally be entitled to termination pay (and in some cases, also severance pay).

This new rule changes the employer’s responsibility significantly. Under the Infectious Disease Emergency Leave, the employee will not be considered to have been on a temporary layoff even if the employer reduces or eliminates their hours of work for cornavirus-related reasons. And while the job is protected (meaning they must be able to return to the same job and rate of pay as before), it also means the employee cannot seek their minimum entitlements to termination pay and severance pay (discussed above).

In non-unionized workplaces, this will allow some employers who wish to maintain their workforce for when operations return closer to normal, and to avoid the financial costs of having to permanently layoff their employees and provide severance packages, to temporarily reduce their workforce/payroll.

Under the new rule, an employee is not considered to be constructively dismissed under the ESA if they were temporary laid off as a result of the coronavirus pandemic (e.g., the employer reduces or eliminates the employee’s hours of work or salary). However, it should also be noted that employers cannot rely on this new rule to justify temporary layoffs made before March 1, 2020, or temporary layoffs that were made for reasons unrelated to coronavirus pandemic.

Infectious Disease Emergency Leave Does and Constructive Dismissal Claims Under Common Law

However, it is important to note that the new (temporary) rule allowing for an Infectious Disease Emergency Leave does not affect an employee’s rights under common law (which is separate from the ESA). In other words, an employer will likely only be able to rely on the new rule if the employee has signed a valid employment contract authorizing a temporary layoff. Otherwise, the employee may still be able to claim Constructive Dismissal against the employer under common law, if they are laid off or experience significant changes to their job (e.g., reduction in hours of work or wages) without their contractual consent. Under common law, such employees may be entitled to a more generous notice period (severance) that often far exceeds the minimum notice requirements under the ESA.

Contact

If you are an employee who has been laid off, or an employer wondering how this new legislation might impact your workplace, please contact Bune Law at 647-822-5492 or fill out the contact form on the side.

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