Layoffs and COVID-19

Written on behalf of Peter McSherry
A sign reading "Sorry, We're Closed" in a business window
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Ontario has announced that the existing state of emergency has been extended to April 23, 2020. Ontario law allows for a state of emergency to be set for a maximum period of 14 days, however, it is very likely there will be an extension beyond this date. All Ontario public schools have been ordered closed through to May 4, 2020. For many Ontarians who have been laid off due to business closures or slowdowns, a return to work date remains uncertain for many weeks.

Public events or gatherings of more than 5 people, not in the same family, remain prohibited.

Federal Government Announces Emergency Relief In Action

As noted in prior posts, the Canada Emergency Care Benefit is now in progress and payments are being processed. If you have applied, be sure to submit monthly reports for each payment period to confirm your eligibility.

I Have Been Laid Off, Now What?

There is no doubt that many companies are in financial difficulty and may need, for perfectly good business reasons, to lay-off staff. Keep in mind the new federal wage subsidy, as mentioned in the last post. Many small businesses may be taking advantage of this option, therefore enabling them to call back employees who had previously been laid off.

In Ontario, an employer is not permitted to let an employee go because they showed symptoms of a disease, any disease, not simply the coronavirus. Similarly, an employer cannot order an employee laid off because it suspects they are infected, due to a self-quarantine or because a family member has taken ill. Also, if an employee is compelled to look after children who are home due to school closings, they cannot be selected for layoff for this reason.

These are basic human rights protections, not legal rights extending from the new Ontario law protecting workers from termination due to coronavirus related issues. Under Ontario law, you need to show that this was “a” factor, as opposed to the sole cause of the lay-off.

Employer Lay-off under the Employment Standards Act

Provincial legislation appears to allow companies the right of temporary lay-off for 13 weeks without benefits and 35 weeks when benefits are continued. However, our courts have interpreted this law to mean that an employee could successfully argue that such a lay-off is legally a termination where there is no written agreement between the employer and employee granting the company this right.

Making the argument that a lay-off is tantamount to termination may not be a good idea. In certain situations, this could be considered, but the nuances of the situation are complex.

Ontario law requires a person who has been fired to look for a new job and accept this new job offer when such an offer of comparable employment is made. Under the law, this is referred to as a “duty to mitigate”, which just means the employee has taken reasonable steps to minimize their damages, even when they are the innocent victim.

Our Supreme Court dealt with this concept in an unusual case in which the employee was a senior management executive of a union. He was terminated without cause. There followed settlement negotiations which did not resolve the case. The union then told him that he could have his old job back, which he refused. He ultimately lost his case as the Court decided that accepting his job back fell within his “mitigation” obligation as long as the job offer was made in good faith and without any stigma or embarrassment.

One recent case considered this very issue in the context of a work lay-off. It decided in favour of the company and concluded that once laid-off, even if considered a termination of employment, the employee had to come back to work again as long as there was no loss of prestige or “acrimony” or bad blood between the parties.

You can see why the answer is not straightforward.

What Should I Do Then, If I’ve Been Laid Off?

Generally, the best idea is to do nothing and collect EI for the layoff period. If your benefits are also continued, be sure to pay your share of the costs, if required, and maintain your disability insurance. This is the last thing you want to lose right now.

Wait until the end of the lay-off and see if you are voluntarily recalled. If so, you have a job and can leave, if you wish, when the time is right for you. If you are not recalled, then you have a potential severance claim. The date of termination will likely be the date of the “no recall” notice. EI received over the lay-off need not be repaid.

You can also then assess whether there is a human rights claim due to adverse treatment because of any of the factors mentioned above. The timing and considerations involved in a wrongful dismissal action following a layoff can be complex. Anyone considering this possibility should consult with an experienced employment lawyer to discuss their options.

Ontario laws and Canadian benefit programs are constantly being updated to deal with this crisis. We will continue to provide updates on new developments in this space. Contact the offices of Guelph employment lawyer Peter McSherry. We can guide you through the issues, help you understand your rights, and defend your position. Contact us online or by phone at 519-821-5465 to schedule a consultation.