On May 29, 2020, Ontario Regulation 228/20 (“the Regulation”) was passed under the Employment Standards Act (“ESA”).  The Regulation aims to provide employers temporary relief from the ESA’s deemed termination provisions where their operations have been shut down or reduced due to the COVID-19 pandemic.  Most of the Regulation’s provisions only affect non-unionized employees, as well as assignment employees (with necessary modifications).

The Regulation makes the following key amendments to the ESA:

• creates a new entitlement to Infectious Disease Emergency Leave (which we previously discussed on our blog here), deeming eligible laid off employees to be on this leave.We refer to the new entitlement as “Layoff Emergency Leave.”
• the layoffs of non-unionized employees will not result in deemed termination of employment during the COVID-19 period.
• the temporary reduction of hours or wages of non-unionized employees during the COVID-19 period will not result in constructive dismissal.

The “COVID-19 period” is defined as the period beginning March 1, 2020 and ending on the date that is six (6) weeks after the current Declaration of Emergency in Ontario is terminated or disallowed. 

These amendments are discussed in more detail below.

Who is Eligible for Layoff Emergency Leave

The Regulation designates diseases caused by a novel coronavirus as “infectious diseases” for the purposes of Infectious Disease Emergency Leave under the ESA, such as Severe Acute Respiratory Syndrome (SARS), Middle East Respiratory Syndrome (MERS) and coronavirus (COVID-19).       

A non-unionized employee will be eligible for Layoff Emergency Leave where:

• the employee’s hours of work are temporarily reduced or eliminated by the employer due to COVID-19, and,
• as a result, the employee is not performing the duties of his or her position.

Such employees will be deemed to be on Layoff Emergency Leave in respect of any time during the COVID-19 period where this situation arises.  A Layoff Emergency Leave will be deemed to have started on March 1, 2020.

Who is Not Eligible for Layoff Emergency Leave

Employees are not considered to be on Layoff Emergency Leave in the following      circumstances:

• where the employer dismisses the employee on or after March 1, 2020;
• where a layoff is necessitated by a permanent discontinuance of all the employer’s business at an establishment on or after March 1, 2020;
• where the employee resigns after receiving notice of termination on or after March 1, 2020;
• where the employee resigns following a constructive dismissal before May 29, 2020; and,
• where a deemed termination as a result of the expiry of an applicable temporary layoff period occurs before May 29, 2020.

  Further, employees who have been given written notice of termination will not be considered to be on Layoff Emergency Leave unless the employer and employee both agree to withdraw the notice of termination.                                                                                                                                                                                                                                                                                                                                            Rights of Employees on Layoff Emergency Leave

• Where an employee is deemed to be on Layoff Emergency Leave, all requirements and prohibitions that normally apply to leaves under the ESA will also apply during the COVID-19 period, except for the following: 

• an employee does not have to advise their employers of their intention to take the Layoff Emergency Leave;
• if the employee stopped participating in certain benefit plans as of May 29, 2020, such as pension plans, life insurance plans, accidental death plans, extended health plans, dental plans, the employee does not have to receive those benefits during the Layoff Emergency Leave; and,
• if the employer stopped making contributions to any employee benefits plans as of May 29, 2020, the employer does not have to reinstate those contributions during the COVID-19 period.

  The Regulation does not affect any payments or benefits the employee received from the employer between March 1, 2020 to May 29, 2020.

   

  Amendments to the ESA’s Deemed Termination Provisions

  The Regulation also amends the ESA’s rules on layoff and deemed termination.  Normally, employees who experience a 50% reduction in wages they would earn at their regular rate in a regular work week are considered to be on temporary layoff under the ESA.  Further, employees who are put on temporary layoff are deemed to have their employment terminated where the layoff lasts longer than 13 weeks in any period of 20 consecutive weeks, or longer than 35 weeks in any period of 52 consecutive weeks where the employee continues to receive substantial payments or benefits. 

  Now, non-unionized employees who experience a reduction or elimination of hours or a reduction of wages due to COVID-19 during the COVID-19 period are exempt from section 56 to 63 of the ESA for the purposes of determining whether such employees have been laid off.  Therefore, a reduction or elimination of hours or a reduction of wages in these circumstances will not trigger the deemed termination provisions of the ESA during the COVID-19 period, except where an employer lays the employee off because of a permanent discontinuance of the employer’s business. 

  However, the exemption from section 56 to 63 of the ESA only applies if there has not already been a deemed termination of employment due to an expiration of the temporary layoff period under the ESA before May 29, 2020.

   

  A Temporary Layoff does not Constitute Constructive Dismissal

  Further, the Regulation states that a temporary reduction or elimination of hours or a reduction of wages due to COVID-19 during the COVID-19 period does not constitute a constructive dismissal.  However, this exemption does not apply to an employee who has already resigned following a constructive dismissal before May 29, 2020.

  The Regulation does not affect an employees’ rights under the common law to claim constructive dismissal as a result of reduced hours or reduced compensation or layoffs. Consequently, an employee could still take the position that he/she has been constructively dismissed as a result of changes made to their compensation, hours or a layoff (unless their employment contract permits such changes or they have consented to the changes).

   

  How a Reduction in Hours of Work and Wages is Defined

  The Regulation defines what constitutes a reduction of hours of work and a reduction of wages.  

  Hours of work are considered to be reduced:

• 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; 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.

Wages are considered to be reduced:

• 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; 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.

  Please note that the Regulation sets out exceptions to what constitutes a reduction of hours of work and a reduction of wages in certain circumstances, such as where the employee is on vacation, or unable to work due to a strike or lock-out.

   

  Complaints to the Ministry of Labour (the “Ministry”)

  If an employee has filed a complaint with the Ministry alleging termination due to a reduction or elimination of hours or a reduction of wages, the Regulation states that such complaints will be deemed to not have been filed if the change(s) occurred during the COVID-19 period for reasons related to COVID-19. 

  However, this does not apply if the complaint relates to the following: 

• the employer dismisses the employee;
• a layoff is necessitated by a permanent discontinuance of all the employer’s business at an establishment;
• the resignation of an employee after receiving notice of termination on or after March 1, 2020;
• the employee resigns following a constructive dismissal before May 29, 2020; and,
• a deemed termination as a result of the expiry of an applicable temporary layoff period occurs before May 29, 2020.

Our firm will continue to provide you with updates as the Ontario Government’s response to the COVID-19 pandemic evolves.

The foregoing is for informational purposes only and should in no way be relied upon as legal advice. For legal advice tailored to your circumstances and business, please contact any of SOM LLP’s lawyers by email or telephone.