Ontario Changes Rules Relating to Layoffs During COVID

Written on behalf of Peter McSherry
A woman at home on her computer representing someone who has been laid off due to COVID
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One thing is clear today is that employment law issues remain in a constant state of flux. This is precisely the reason to keep in touch with our office to receive up to date and current advice on all legal issues as they unfold.

Emergency Extended

Ontario has now announced that the state of emergency, which was last extended to June 2, has yet again been extended to June 30. This date is very important for employment law purposes as it impacts many issues which are dependent upon the definition of this time period.

For example, adverse treatment of an employee due to a COVID-19 issue has a remedy under the Employment Standards Act which is limited to offensive action committed within the period of the emergency. Public schools are, of course, closed for the remainder of the school year, which again impacts the legal rights of parents who are required to deal with childcare issues during the period of the emergency.

Although the emergency period has been extended, the province remains committed to continuing to proceed through to Phase Two of the re-opening process. Stay tuned to this page for further breaking updates.

Lay-off Redefined

On May 29th, the province announced the passing of a Regulation to the Employment Standards Act (ESA) that will redefine layoffs during the emergency period. This law is a good example of the need to stay on top of employment law issues. It is incredible how quickly the legal rules are changing, and not always fairly.

The definition of “temporary lay-off” for many years has been 13 weeks where no benefits are continued. It is longer, 35 weeks, where benefits have been offered. This issue was discussed in a prior post which dealt with layoffs during COPID-19. However, things have since changed.

In view of the length of the emergency period, Ontario has now revised the definition of “temporary lay-off” but only during the emergency period. If an employee is laid off in the “COVID-19 Time Period” due to the coronavirus, then this is deemed not to be a “lay-off” under the ESA.

The COVID-19 Time Period is defined to be any time from March 1 through to the end of the period of the emergency plus 6 weeks. Given the present extension through to June 30, that would take the protected period from March 1 to August 11. Keep in mind that it could still be longer if the period of the emergency is extended further.

What Does This Mean?

If you are laid off temporarily at any time during this period without benefits, which extends to 13 weeks, then you do not have the right to consider yourself terminated for the purposes of the ESA. Ordinarily and indeed prior to May 29, you would be entitled to payment of the termination pay and severance pay sums under the ESA which could be as high as 34 weeks pay.

Constructive Dismissal Changes

Normally if a company changes your hours of work or salary or rate of pay, you could consider this to be a “constructive dismissal”. That is, you can “construct” this action to be a termination. This would normally allow you to claim the ESA termination and severance payments.

The new law states that during the COVID-19 period, this right does not apply for the purposes of the ESA. Note that this is only for remedies under the ESA. The common law remains the same, but more on this later.

Lay-offs & the Common Law

In our prior post, we discussed the legal issues about a lay-off and common law rights. As mentioned in this post, if your company offers you the same job back at the end of the lay-off period, then you will likely have to accept it, as any claim stemming from the layoff may be modest or nothing at all. If you are offered the opportunity to return to work, whether the conditions of your new employment have changed or not, come in and review this issue before you make any decisions. Our office can provide guidance on your options and the associated risks.

Constructive Dismissal & Common Law

As mentioned above, if your employer changes the terms of your employment by offering reduced hours or fewer wages, then you can, at common law, argue that this has terminated your employment. You will not have a claim for the statutory entitlements but you will have a common law claim for lost income for the “notice period”. The notice period will not go forever, but can be considerable.

Leave & Benefits

As we reviewed what seems like years ago, an employee who is not working due to COVID-19 issues is deemed to be on unpaid leave, but the law mandated that this leave period would be with benefits.

So if you were not working due to child care issues or because your company just had to cut back staff, at least your benefits remained in place. If you suffered a serious medical issue and could not work, due to coronavirus or a related issue, at least your drug plan or disability insurance was in place.

Not so fast. Ontario just changed this law, and backdated it as well, which is unheard of. The new law states that if the employer could not afford to continue the benefits during the leave, or you decided to stop the benefits the employer is not on the hook to pay for them.

If you had a major medical issue, and the employer had decided to cease the benefit plan, then it has now been allowed, retroactively, to do so. This is completely unfair and likely illegal but that it is for another day.

This is another example illustrating the need to stay updated.

Common Law & No Benefits on Leave

The ESA rules are for one limited purpose and do not define the common law. If you have suffered a major health issue and were uninsured in this period, please come in and talk. You likely still have a remedy.

Times are Changing

Clearly our employment law rules are changing day to day. Stay on top of the curve.  Come in and talk over your story and get advice. We will update the all news as it develops 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.