COVID-19: New Regulation Provides Relief from ESA Constructive Dismissal Claims

Posted May 29, 2020.

On Friday, May 29, 2020, the Ontario Government introduced a new regulation impacting COVID-19 related temporary layoffs in the province.  The regulation (O. Reg. 228/20, Infectious Disease Emergency Leave) has been issued under the Employment Standards Act, 2000 (ESA) and impacts an employee’s ability to claim “constructive dismissal” in response to being laid off without pay.

The following is a summary of the key questions for employers related to this new regulation:

1. What does the regulation do?   The regulation has 3 major implications:
   • • Employees who have had their hours reduced or eliminated due to COVID-19 are deemed to be on an ESA infectious disease leave of absence;
     • The period of deemed leave will not be construed as a layoff for the purposes of termination and severance during the COVID-19 Period;
     • The temporary reduction or elimination of hours by an employer due to COVID-19 or a temporary reduction in an employee’s wages due to COVID-19 will not be constructive dismissal if it occurs in the COVID-19 period.
       • [Note: Certain exceptions apply to each of the 3 rules above depending on the circumstances]
2. Who does this regulation apply to?  The regulation applies to non-union employees who have their hour of work temporarily reduced or eliminated because of COVID-19 (“Affected Employees”).
3. Does this regulation apply to union employees? No.
4. When does this regulation apply?  The regulation applies retroactively to reduction or elimination of of hours and wages going back to March 1, 2020 and continuing until the day that is six weeks after the day that the declared emergency is terminated.
5. What Leave Protections Apply? All normal ESA leave protections apply (i.e. continuation of benefits on the same terms as during active employment, return to pre-leave positions at the end of the leave (or comparable position if the prior position no longer exists)), subject to the following modifications:
   • Notice of commencement of leave provisions do not apply;
   • If the employee stopped participating in a benefit plan protected by the ESA as of May 29, 2020, they’re exempt from s. 51(1) (benefit continuation) of the ESA with respect of that plan for the entire COVID-19 period and the employer need not make payments. Benefits will continue as per the ESA if they were never ceased and contributions continued up until May 29.
   • Employees may have their employment terminated during the deemed leave.
6. Can employers still terminate an employees employment? Employers can still terminate an employee’s employment intentionally on or after March 1, 2020 (as opposed to constructive dismissal or layoff expiry) and such intentional terminations will not be converted to infectious disease leave. Employees who are currently in their written notice period will not be on the new infectious disease leave unless the employer and employee agree to withdraw the termination notice.
7. What about outstanding Ministry of Labour complaints? Any complaints filed with the Ministry of Labour arguing that reduction in hours or pay constitute termination are deemed not to have been filed if they occurred in the COVID-19 Period and were due to COVID-19.  This will not apply to a complaint that relates to an intentional termination (as opposed to constructive dismissal or layoff expiring) at any time or concerns constructive dismissal or layoff expiry before May 29, 2020.
8. What are Reduced Hours and Wages? Hours of work are reduced if the employee works fewer hours in a work week than their last regular work week before March 1, 2020. Wages are reduced in the sense of the regulation when the employee earns less regular wages than they did in their last week before March 1, 2020. Note, there are rules for assessing “reduced hours” for employees who do not have a regular work week, was not working in that last week, or was on vacation, suspended, or not able to work prior to March 1, 2020.

Be sure to tune in for our upcoming COVID-19 webinar series for further details and analysis on the implications for your organization.

PooranLaw will continue to monitor legal developments during the COVID-19 pandemic.  In the meantime, if you require legal assistance, we encourage you to reach out to your regular PooranLaw lawyer, or any member of our team.