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A Further Update on COVID-19 – The Government of Ontario Publishes a New Regulation Amending the Employment Standards Act to Address Layoffs and Constructive Dismissal

June 1, 2020
by Israel Foulon LLP


Since our May 21, 2020 E-Bulletin, the Ontario government has published a new Regulation making time limited amendments to the Employment Standard Act (ESA) under Ont. Reg. 228/20 to address issues related to the COVID-19 pandemic, including layoffs and constructive dismissal.

This Regulation relieves both employers and employees from the ESA’s de facto termination of employment after the 13 week temporary layoff period for COVID-19 related layoffs and deems certain changes to the employment relationship not to amount to a constructive dismissal.

The COVID-19 Period

The changes to the ESA govern the period of time from March 1, 2020 until six weeks after the state of the emergency declared by the government of Ontario has ended (“the COVID-19 Period”).

Infectious Disease Emergency Leave

Where an employee’s hours of work have been temporarily reduced or eliminated, or the employee is unable to perform the duties of their employment because of the impact of the COVID-19 virus, they are retroactively deemed to be on Infectious Disease Emergency Leave. This does not apply in cases where the employer has already terminated or severed the employee pursuant to the ESA on or after March 1, 2020 or before May 29, 2020, including through advance written notice of termination (unless the employer and employee agree to withdraw the notice of termination).

Infectious Disease Emergency Leave is a statutory job-protected leave. Any employee who is deemed to be on infectious disease leave is subject to the same rights and entitlements as are other employees who are on other job protected leaves under the ESA (such as pregnancy / parental leave). As a result, upon their return to work, an employee on infectious disease leave is generally entitled to be reinstated to the position that they most recently held, if it still exists, or to a comparable position if it does not.

One notable exception is that pursuant to the Regulation, an employer is exempt from the requirement to continue the employee’s benefit plan contributions, during the employee’s infectious disease leave, if the benefit plan contributions had already ceased prior to May 29, 2020.

Changes to the Layoff Provisions

Where an employer has reduced an employee’s hours of work or wages as a result of COVID-19, the employee is deemed not to be on lay off for the purposes of the ESA. The Regulation does not apply where the employer has:

  • Permanently shuttered its business; or
  • Previously terminated or severed the employee’s employment pursuant to the ESA.

Employers should note that the Regulation has retroactively altered the status of employees placed on temporary layoff because of reasons related to COVID-19. For the purposes of the Act, these employees are now deemed to be on Infectious Disease Emergency Leave.  These employees are no longer considered to be on temporary layoff for the COVID-19 Period.

Changes to Constructive Dismissal Provisions

The Regulation restricts an employee’s right to assert that they have been constructively dismissed under the ESA during the COVID-19 Period. The Regulation deems that an employee is not constructively dismissed where:

  • The employer has temporarily reduced or eliminated their hours of work; and/or
  • The employer has temporarily reduced their rate of pay; and
  • The reduction in the employee’s hours of work or rate of pay are for reasons related to COVID -19.

The Regulation does not apply if, prior to May 29, 2020, the employee was constructively dismissed and resigned their employment within a reasonable time.

ESA Complaints

Complaints filed with the Employment Standards Office that allege changes in an employee’s hours of work or rate of pay, for reasons related to COVID-19, are deemed not to have been filed – except where the employee’s contract of employment has been terminated pursuant to the Act.

Takeaway/Impact on Employers

The Ontario government’s changes follow in the footsteps of governments in BC, Alberta, Saskatchewan, and Manitoba, who had previously announced varying amendments to the layoff provisions in their employment standards legislation.

As a result of Ont Reg 228/20, for the COVID-19 Period, employers no longer need to be concerned regarding a deemed termination under the ESA as a result of exceeding the applicable layoff timeline(s). Given that many layoffs occurred in mid-March 2020, a deemed termination after a layoff of 13 weeks (which generally applies unless benefits are continued) was fast approaching for many employees.  Since these employees are now deemed to be on Infectious Disease Emergency Leave for the COVID-19 Period (and not on a temporary layoff) the automatic termination rule at the 13 week period no longer applies.

Effect on the Common Law

There is currently much debate as to whether this Regulation affects an employee’s right to claim common law constructive dismissal through civil proceedings. This issue is complex, and we recommend speaking to legal counsel with respect to each specific circumstance as it arises.

You can access the full Regulation here HERE.

You can access the Ontario government’s newsroom announcement regarding the changes HERE.

Given the exceptional and unprecedented situation, we expect further developments in the coming days.

Israel Foulon’s Response to COVID-19 Israel Foulon is assessing the situation as it evolves, and is taking all necessary precautions within its workplace. To slow the spread of COVID-19 and for the health of our team and clients, absent extraordinary circumstances we are working remotely until further notice whenever possible. However, please be aware that our offices remain open and are fully functioning. In the circumstances, we encourage our clients to contact us by phone and email to the extent possible. Voicemail messages left at our office phone numbers are immediately forwarded via email. All messages will be promptly responded to. We remain steadfast in our commitment to our clients and would be more than happy to assist you with concerns regarding COVID-19 or any other employment or labour matters.

Legal Disclaimer

This article is for informational purposes only and is not intended to provide legal advice, which in all circumstances must be tailored to the specific facts of any problem. You should obtain a proper legal consultation in order to determine how this article applies to your specific situation. Please feel free to contact Israel Foulon LLP to learn more at 416-640-1550.