Williams HR Law LLP

Ontario Enacts Additional Extension to the Temporary Rules for Layoffs and Constructive Dismissal

June 18, 2021

As of June 4, 2021, the Ontario Government has once again extended the period during which employers can temporarily lay off non-unionized employees for reasons related to COVID-19 without it being deemed a termination of employment under the Employment Standards Act, 2000 [ESA]. This development provides more time for Ontario employers who are struggling to recover from the business impacts of COVID-19 to recall their employees to work without violating the ESA. However, as we have set out in more detail below, there remains potential risk for employers that have laid off employees who do not have layoff clauses in their employment agreements.

The Temporary Rules

On May 29, 2020, the Province temporarily changed the rules relating to temporary layoffs under the ESA. Normally, the ESA provides that employees can be temporarily laid off for up to 13 weeks within a 20-week period, or 35 weeks within a 52-week period, depending on the circumstances, after which time their employment is deemed to be terminated if the layoff continues. However, the Province effectively “paused” layoffs when it enacted O. Reg. 228/20: Infectious Disease Emergency Leave (the “Regulation”). The Regulation temporarily deemed employees who had been laid off or had their hours or wages reduced for reasons related to COVID-19 to instead be on a statutory Infectious Disease Emergency Leave (“IDEL”), rather than on layoff. This meant that during the period when the Regulation was in effect, for the purposes of the ESA, employees who had been laid off since March 1, 2020 were no longer considered to be on a temporary layoff, and the usual rules pertaining to the duration of layoffs temporarily did not apply.

The period during which employees who had been laid off were deemed to be on IDEL rather than layoff (the “COVID-19 Period”) was originally scheduled to end on September 4th, 2020. The Province has since extended the COVID-19 Period a number of times. This most recent extension will see the COVID-19 Period expire on September 25, 2021.

What Does This Mean?

Employers are now able to continue laying non-unionized employees off for reasons related to COVID-19 until September 25, 2021 without triggering the ESA’s limits on the duration of the layoffs. This is because such employees will be considered by law to be on IDEL rather than a layoff. As a result, time during which employees are “laid off” during the COVID-19 period will not count towards the maximum duration for layoffs under the ESA. Employers who are unaware of the details and exceptions that apply to IDEL should consult our previous blog on the matter.

Importantly, after the expiration of the COVID-19 Period on September 25, 2021, the regular ESA and common law rules related to temporary layoffs and constructive dismissal will come back into force. As such, employers who have implemented layoffs or hours reductions absent the contractual right to do so should strongly consider returning employees to work prior to September 25, 2021. Employers who are unable to return employees to work by that date will be at risk of facing constructive dismissal claims as a result of the normal rules resuming.

Employers should also bear in mind that while employees on IDEL cannot claim their employment was terminated for the purposes of the ESA, there is conflicting case law about whether the Regulation impacts an employee’s ability to claim constructive dismissal at common law as a result of a COVID-19 related layoff. Currently, the most recent authority on the matter says that an employee on IDEL will be deemed not to have been constructively dismissed by their employer for purposes of the common law. However, this law remains uncertain and employers who have laid employees off without the contractual right to do so still face a real risk that the layoff will be considered a constructive dismissal at common law giving rise to potentially significant common law termination entitlements, despite that they do not violate the ESA. Please see our blog post on the Taylor v Hanley Hospitality Inc. decision for further information.

As always, we will monitor the progression of COVID-19 related measures affecting employers and post further updates as they become available to keep you In the Know.

This blog is provided as an information service and summary of workplace legal issues.

This information is not intended as legal advice.