COVID-19: Ontario Addresses the Temporary Layoff Dilemma with O. Reg. 228/20

June 1, 2020

The COVID-19 pandemic has placed enormous burdens on employers, particularly those that were declared “non-essential” and could not transition their employees to work-from-home arrangements. In many cases, this resulted in the difficult decision to place employees on temporary layoff or to reduce hours of work or pay. In the case of temporary layoffs, as June approached, many employers were facing the risk of deemed terminations under the Employment Standards Act, 2000 (Ontario) (“ESA”), even where both the employer and the employee wanted to continue the employment relationship.

On May 29, 2020, the Government of Ontario moved to address these concerns when it tabled Ontario Regulation 228/20 – Infectious Disease Emergency Leave (the “Regulation”). The Regulation amends the ESA as it relates to Infectious Disease Emergency Leave, temporary layoffs and deemed terminations in respect of non-unionized employees, replacing the previous Infectious Disease Emergency Leave Regulation (O. Reg. 66/20).

Key Takeaways

Recognizing the ongoing and time-sensitive impacts of the COVID-19 pandemic on employers and employees, the Government of Ontario has moved to take a creative approach to certain workforce changes, including temporary layoffs, hours reductions and wage reductions, in order to protect employers and employees from undesirable statutory outcomes.

During the COVID-19 period prescribed by regulation, employees who have had their hours reduced or eliminated as a result of the COVID-19 pandemic will be deemed for ESA purposes to be on Infectious Disease Emergency Leave, which is an unpaid, job-protected leave.

This does away with the imposition of temporary layoffs and also eliminates constructive dismissal risk (whether connected to hours reductions or wage reductions) for statutory purposes.

What group of employees does the Regulation affect?

The bulk of the provisions of the Regulation only affect non-unionized employees (including assignment employees, with necessary modifications).

What constitutes an “infectious disease”?

COVID-19, along with SARS, MERS and other diseases caused by a novel coronavirus, are designated as infectious diseases for purposes of Infectious Disease Emergency Leave under the ESA. 

While COVID-19 will constitute an infectious disease for purposes of the ESA leave provisions generally from January 25, 2020 forward, it will only trigger the deemed Infectious Disease Emergency Leave provisions described below for the “COVID-19 Period”.

What is the “COVID-19 Period” for purposes of the Regulation?

The “COVID-19 Period” starts on March 1, 2020 and ends six (6) weeks after the day that the current emergency declaration in Ontario is terminated or disallowed.

What if an employee had their hours of work reduced or eliminated during the COVID-19 Period?

Any non-unionized employee who had their hours of work temporarily reduced or eliminated by their employer for reasons related to COVID-19, and is not performing the duties of his or her position as a result, shall be deemed to be on Infectious Disease Emergency Leave in respect of any and all time during the COVID-19 Period where those circumstances arise. This is both retroactive to March 1, 2020 and prospective to the end of the COVID-19 Period.

What this means is that a reduction or elimination of hours of work, or a corresponding reduction of wages, by an employer as a result of COVID-19 does not trigger a temporary layoff during the COVID-19 Period. This is both retroactive to March 1, 2020 and prospective to the end of the COVID-19 Period.

Note that this only applies where there hasn’t already been a deemed termination of employment as a result of the lapsing of a temporary layoff period under the ESA before May 29, 2020.

What happens to a period of temporary layoff that may already have happened?

Any period of temporary layoff that arose before March 1, 2020 will remain intact and will count towards future statutory temporary layoff calculations. Any period of layoff that arose on or after March 1, 2020 that otherwise meets the requirements of the Regulation in that it was connected to COVID-19 will be eliminated and will not count for any statutory temporary layoff calculations in the future.

What about constructive dismissal?

The Regulation establishes that a temporary reduction or elimination of hours or a reduction of wages during the COVID-19 Period does not constitute a constructive dismissal. This is both retroactive to March 1, 2020 and prospective to the end of the COVID-19 Period.

Note that this only applies where there hasn’t already been a resignation by the employee following a constructive dismissal before May 29, 2020.

What rights or benefits does an employee have who has been deemed to be on infectious disease leave during the COVID-19 Period?

All of the normal rules associated with statutory leaves under the ESA will apply to an employee who is deemed to be on Infectious Disease Emergency Leave during the COVID-19 period, except for the following:

The normal requirement for the employee to provide notice of their intention to take the leave does not apply;

If the employee stopped participating in certain benefit plans as of May 29, 2020, the employee does not have to make a further election to not participate during the COVID-19 Period; and

If the employer stopped making employer-contributions to certain benefit plans as of May 29, 2020, the employer does not have to reinstate those contributions during the COVID-19 Period.

There is no impact on payments or benefits an employee received from their employer between March 1, 2020 to May 29, 2020.

What if an employee’s employment was already terminated prior to May 29, 2020?

Where an employee’s employment ended or ends as a result of:

• a termination by the employer on or after March 1, 2020;
• a layoff resulting from the permanent discontinuance of all of the employer’s business at an establishment on or after March 1, 2020;
• a resignation by the employee after the provision of notice of termination on or after March 1, 2020;
• a resignation by the employee following a constructive dismissal before May 29, 2020; or
• a deemed termination as a result of the lapsing of an applicable temporary lay-off period before May 29, 2020;

that cessation of employment will stand – the Regulation does not reverse this outcome.

What if an employee is currently on working notice of termination?

If the employer and the employee agree, the notice can be withdrawn and the employee can be deemed to be on Infectious Disease Emergency Leave. Without agreement of both parties, however, the notice of termination stands.

What if an employee has filed a complaint with the Ministry of Labour relating to a reduction or elimination of hours or a reduction of wages, alleging a termination?

Those complaints shall be deemed not to have been filed if the impugned change occurred during the COVID-19 Period for reasons related to COVID-19.

This does not apply if the complaint relates to:

• a termination by the employer;
• a layoff resulting from the permanent discontinuance of all of the employer’s business at an establishment;
• a resignation by the employee after the provision of notice of termination;
• a resignation by the employee following a constructive dismissal before May 29, 2020; or
• a deemed termination as a result of the lapsing of an applicable temporary lay-off period before May 29, 2020.

Does the Regulation define what constitutes a reduction in hours?

Yes. Hours of work are considered to be reduced if the following occurs:

• where the employee has a regular work week, the employee works fewer hours in the work week than they worked in the last regular work week before March 1, 2020, noting certain exceptions; or
• where the employee does not have a regular work week, the employee works fewer hours in the work week than the average number of hours they worked per work week in the 12 consecutive work weeks preceding March 1, 2020, noting certain exceptions.

Does the Regulation define what constitutes a reduction in wages?

Yes. Wages are considered to be reduced if the following occurs:

where the employee has a regular work week, the employee earns less regular wages in the work week than they worked in the last regular work week before March 1, 2020, noting certain exceptions; or

where the employee does not have a regular work week, the employee earns less regular wages in the work week than the average amount of regular wages they earned per work week in the 12 consecutive work weeks preceding March 1, 2020, noting certain exceptions.

For employers who have questions about the impact of these changes on their business and their people, please contact  Christine Jonathan at Loopstra Nixon.

This article is not intended to serve as a comprehensive treatment of the topic and is not legal advice. All legal matters are dealt with pursuant to their specific facts and circumstance. Nothing replaces retaining a qualified, competent lawyer.