Infectious Disease Emergency Leave Regulation – Deemed Leaves and Layoffs

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Today the Ontario Government published Regulation 228/20 under the Employment Standards Act, 2000 (ESA) which fundamentally and retroactively alters the treatment of layoffs and reductions in hours that occur during the pandemic by deeming them to be job protected leaves and not layoffs. The regulation also declares reductions in hours and wage reductions during the pandemic not to be a constructive dismissal.  Note that regulation does not change any entitlements for unionized employees.

Background

By way of background, the On March 19, 2020 the Ontario Government passed Bill 186, the Employment Standards Amendment Act (Infectious Disease Emergencies).

The legislation provides for two kinds of job protected leave including a leave (retroactive to January 25, 2020) for employees for a number of reasons related to a designated infectious disease (COVID-19 is a designated infectious disease).  The reasons include:

  • The employee is under investigation or treatment for COVID-19

  • The employee is acting in accordance with a public health order related to COVID-19

  • The employee is in quarantine or self-isolation due to COVID-19

  • The employee is under a direction given by his or her employer in response to a concern of the employer that the employee may expose other individuals in the workplace to the designated infectious disease.

  • The employee is providing care or support to family members because of COVID-19 including school or day care closures.

  • The employee is directly affected by travel restrictions related to COVID-19

  • Such other reasons as may be prescribed.

Employees seeking to take this leave are required to provide notice to their employer.  Employees on leave are entitled to the same statutory protections as for other types of leave under the Act.

Reduction of Hours Now a Deemed Leave, not a Layoff

As per the regulation power set out in the last bullet point above, the government has prescribed a new reason for a job protected leave:

  1. The employee’s hours of work are temporarily reduced or eliminated by the employer for reasons related to the designated infectious disease.

This new “reason” does not apply to unionized employees.  For non-union employees, it means that a reduction in hours by an employer, whether partial or complete, is considered a leave, not a layoff.  To make it clear that the leave is not a layoff, the regulation also expressly states that an employee whose hours are reduced, or whose wages are temporarily reduced are exempt from the sections of the ESA that determine whether an employee is considered to be laid off. The only exception is if an employee is no longer working because there is a permanent discontinuance of all of an employer’s business at an establishment.

As this is a deemed leave, there is no obligation for employees to provide notice of their intention to take the leave.

In order to come within this deeming provision, the reduction in hours or wages must be related to COVID-19.  Further, the reduction in hours or wages must occur during the “COVID-19 period” which is defined as the period beginning on March 1, 2020 and ending six weeks after the declared emergency has terminated or been disallowed.

Benefits

Under normal circumstances, an employer is obligated to continue benefits during a statutory leave of absence.  Under the regulation, if benefits were not continued as of May 29, 2020, the employer is not obligated to commence contributions now that the layoff has been retroactively converted to a leave.

Terminations between March 1 and May 29 and Terminations in Progress

Although the regulation has retroactive effect, it does not convert to leaves terminations that were completed after March 1,  2020.  Further, temporary layoffs that exceeded the maximum number of weeks permitted under the Act and were deemed to be a termination and/or severance prior to May 29, 2020, are not changed by the regulation.

Employees who were given statutory notice of termination prior to May 29, 2020 shall not be converted to being considered to be on leave unless the employer and the employee agree to withdraw the notice of termination.

Reduction in Hours, Wages Not a Constructive Dismissal

The regulation states that the following does not constitute a constructive dismissal if it occurred during the COVID-19 period:

  1. A temporary reduction or elimination of an employee’s hours of work by the employer for reasons related to the designated infectious disease.

  2. A temporary reduction in an employee’s wages by the employer for reasons related to the designated infectious disease.

The above does not apply to any circumstances where an employee was constructively dismissed and resigned in response prior to May 29, 2020.

Complaints to the Ministry of Labour Deemed Not to be Filed

The regulation effectively eliminates any complaints filed with the Ministry of Labour Employment Standards Branch where the complaint asserts that “a temporary reduction or elimination of an employee’s hours of work by the employer or a temporary reduction in an employee’s wages by the employer constitutes the termination or severance of the employee’s employment” if the reason for the reduction is COVID-19.

How to Determine Reduction in Hours and Wages

Generally, the reference week to determine whether an employee’s wages or hours have been reduced is the week prior to March 1, 2020.  If an employee’s hours or wages vary from week to week, the reference point is the average in the twelve week period prior to March 1, 2020.  If the employee was not employed for a full week prior to March 1, 2020, the employees wages or hours are considered reduced if the employee earns/works less than they did in the work week in which they earned the most regular wages/worked the greatest number of hours.  There are additional provisions to address if an employee is on vacation, leave, disciplinary suspension, strike, etc during the reference week.

Application to Temporary Help Agencies

The regulation expressly states that it applies to assignment employees with necessary modifications.

Implications for Employers

It has been more than 10 weeks since the government declared as state of emergency in Ontario on March 17, 2020.  Many employees were impacted with reduced hours and wages or were temporarily laid off.  Before the regulation was issued, we were approaching the thirteen week threshold that would have triggered terminations under the ESA for any employers who did not extend the temporary layoff period by providing benefits, SUBP top ups or other payments during the layoff.  Converting the layoffs to a leave avoids the obligation to pay termination pay and severance for COVID-19 related interruptions to employment.  However, it does create other obligations:

  • Employees are entitled to the protections associated with statutory leaves including the right to reinstatement upon the expiry of the leave if their job still exists, or an alternative job if it does not.

  • Employees who are “laid off” after May 29, 2020 will automatically be placed on leave and will be entitled to benefit continuation (subject to employees paying their portion of any benefit premiums or contributions).

  • Employees who were laid off with benefits, will continue to be entitled to those benefits under they are recalled.

  • Employees who were given notice of termination prior to May 29, 2020 may seek to have their notice rescinded in favour of being placed on leave.

  • Claims for constructive dismissal where the employee resigned in response to the changes to their employment contract that commenced prior to May 29, 2020 may continue.

If you have any questions regarding the application of the  new regulation to your business, please contact us at ahunter@hlllp.ca.

 

The article in this update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hunter Liberatore Law LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hunter Liberatore Law LLP. ©

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