Williams HR Law LLP


March 21, 2020

The COVID-19 pandemic has had a massive impact on how Canadian employers conduct business. Canada’s federal and provincial governments have been continuously announcing measures to lessen the impact of the pandemic on employers and employees.

Given the rapidly changing landscape that employers have faced in recent weeks, we have detailed some of the key supports that the Ontario government and the Government of Canada have introduced, as well as some of the key concepts employers should consider when planning for the uncertain weeks and months ahead. Given the reduction or suspension of services in certain industries, we also provide guidance as to how to properly implement layoffs, while highlighting certain federal benefit programs that employers and employees may be able to leverage to limit disruptions.

Employment Standards Amendment Act (Infectious Disease Emergencies), 2020 and Other Measures

The Ontario government has passed emergency legislation to provide unpaid, job-protected leaves of absence for employees unable to work for the following reasons:

  • The employee is under medical investigation, supervision or treatment for COVID-19
  • The employee is acting in accordance with an order under the Health Protection and Promotion Act
  • The employee is in isolation or quarantine in accordance with public health information or direction
  • The employer directs the employee not to work due to a concern that COVID-19 could be spread in the workplace
  • The employee needs to provide care to a person for a reason related to COVID-19, such as a school or daycare closure
  • The employee is prevented from returning to Ontario because of travel restrictions

Employers can ask for reasonable proof of the need for the leave, but not a medical note.

The measures are retroactive to January 25, 2020, the date that the first presumptive COVID-19 case was confirmed in Ontario and will continue “until COVID-19 is defeated”, according to the government.

The provincial government is also reviewing current access and eligibility requirements for obtaining emergency assistance (available through the Ontario Works program) to support individuals who are impacted by COVID-19 and are not able to meet their basic living expenses.

Federal Supports

In addition to the measures announced last week (including waiving the one-week waiting period and medical note requirement for Employment Insurance (“EI”) sickness benefits, and $10 billion in credit for small businesses), the federal government announced on March 18, 2020, an aid package of $27 billion and has set aside $55 billion in tax deferrals for businesses and families.

The new supports include the following measures directly relevant to employers and workers:

  • $2 billion to boost the Canada Child Benefit
  • A new Emergency Care Benefit of $900 bi-weekly for up to 15 weeks for those who fall ill, are in quarantine or have to care for an infected family member and do not qualify for EI
  • $5 billion for a new Emergency Support Benefit for workers (including self-employed workers) who lose their job and are ineligible for EI
  • A temporary 10% wage subsidy for small business (to a maximum of $1,375 per worker and $25,000 total per business)
  • Deferred tax payments until after August 31, 2020

We will provide more information detailing these supports as it becomes available.

Layoffs – Rules and Considerations

As Canadians are encouraged to self-isolate and work from home (where possible), and as the economy reels from the impact of COVID-19, many employers are faced with tough choices. One of the most challenging among them is the possibility of having to temporarily lay off some, or all, of their employees. For those employers that may be contemplating layoffs, we have set out the relevant rules and key considerations under provincial and federal legislation when downsizing your workforce.

General Principles

Generally, employers must reserve the right to lay employees off in employment agreements. If employers lay employees off without having reserved the right to do so, the layoff will be considered a unilateral change to the fundamental terms of the employment relationship, and the employee will be able to claim that the layoff is a constructive dismissal. Employers should be mindful of this reality in making layoff decisions given the significant added liability that can arise from the constructive dismissal of their employees.

If an employee is laid off for longer than the allowed period under the applicable employment standards legislation, the layoff is considered a deemed termination of employment for the purposes of the legislation.

During a temporary layoff, employees may be eligible to receive EI benefits. Additionally, employers who are able and inclined to do so can top up any EI benefits through a Supplemental Unemployment Benefit (“SUB”) plan registered with Service Canada.

To prevent or delay the need for layoffs, the Government of Canada has announced temporary special measures with respect to its Work Sharing Program.

Temporary Layoffs under Ontario Legislation

Under Ontario’s Employment Standards Act, 2000 [ESA], the employer does not need to specify a recall date or provide written notice of a temporary layoff, or provide a reason. Non-unionized employees can be laid off without it being deemed to be a termination for up to 13 weeks in a 20-week period. These employees can also be laid off for a longer period of up to 35 weeks in a 52-week period in certain circumstances, which include when the employer continues the employee’s health, retirement or pension benefits or maintains a SUB plan for the employee’s benefit, among other circumstances.

Temporary Layoffs under Federal Legislation

Under the federal Canada Labour Code [CLC], non-unionized employees can be laid off without it being deemed to be a termination for three months or less. Layoffs of more than three months, but less than six months, are permitted where the employer notifies the employee in writing at or before the time of the layoff that they will be recalled on a fixed date or within a fixed time period within six months of the date of layoff (and the employee is recalled on that date or within that period). Longer layoffs of more than three months are also permitted in certain circumstances, including if the employer continues to pay the employee during the layoff at an amount agreed by the employee, if the employer continues paying benefit or pension premiums for the employee, and if the employee receives benefits through a SUB plan.

Mass/Group Terminations

Larger employers considering permanent layoffs (i.e. terminations), or that believe their temporary layoffs may be long enough to be deemed terminations under the ESA or CLC, should consider the mass/group termination provisions of the ESA and CLC. Those provisions mandate significantly enhanced statutory notice obligations and time-sensitive administrative obligations for employers terminating the employment of 50 or more employees within a four-week period.

As always, we will be monitoring any further updates from all levels of government, and will keep you In the Know. If you have any questions about any of the above, please contact a member of our team.

This blog is provided as an information service and summary of workplace legal issues.  This information is not intended as legal advice.