Top 10 Legal Developments for Ontario Employers from the Summer of 2020

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By now many of us have reached the saturation point for consuming legal updates about COVID-19. Today the Ontario government will be ending its declaration of a state of emergency under the Emergency Management and Civil Protection Act (EMCPA). With that milestone, we thought it would be a good time to review the most recent and relevant legal developments. In this publication we are highlighting what we think are the top 10 recent changes or notable cases that employers in Ontario need to know about.

# 1 – Bill 195 – From a State of Emergency Under EMCPA to the New Regime

On July 21, 2020, the Ontario government’s Bill 195 received Royal Assent. The Act was proclaimed in force today.

Bill 195 transitions orders under sections 7.0.2 and 7.1 of the EMCPA related to COVID-19, to be orders under the new Act which does not really lend itself to a good acronym – the Reopening Ontario (A Flexible Response to COVID-19) Act, 2000. We

will call it the “Reopening Ontario Act”. With the proclamation of the Reopening Ontario Act, the state of emergency declared under the EMCPA will end.

Once the orders are transitioned, the government may:

  • Extend emergency orders for up to 30 days at a time; or

  • Amend most of the emergency orders (there are exceptions) where the amendments relate to:

  • Labour redeployment or management of workplaces, including credentialing processes in a health care facility;

  • Closing or regulating any place, whether public or private, including any business, office, school, hospital or other establishment or institution; and

  • Prohibiting or regulating gatherings or organized public events.

The new Act clarifies that in amending orders, the government can impose more onerous or different requirements and extend the application of the orders, including the geographic scope of the order and the persons it applies to.

The ability to extend orders by 30 days ends on the first anniversary of the Act unless the legislature approves further extensions.

The Reopening Ontario Act effectively ends and extends the status quo under the current state of emergency. However, the government’s ability to issue new orders related to the pandemic will end.

#2 – Stage 3

Effective July 17, 2020, a number of regions in Ontario moved to Stage 3 in the province’s re-opening. An additional seven regions moved to Stage 3 effective today (July 24, 2020). Only Toronto, Peel and Windsor-Essex remain in Stage 2. A series of Regulations were published to allow for the expansion of business operations for the regions in Stage 3.1

Relevant to employers, Regulation 364/20 sets out the rules that businesses in Stage 3 must follow, including:

  • General compliance: Ensuring compliance with:

  • all applicable laws, including the Occupational Health and Safety Act (OHSA) and related regulations; and

  • advice, recommendations of public health officials, including any on physical distancing, cleaning or disinfecting.

  • Capacity limits: Maintaining at least two metres distance between people. Maximum of 50 persons at indoor events, and 100 persons at outdoor events.

  • Cleaning: Ensuring that any amenities and equipment made available to the public are cleaned and disinfected as frequently as is necessary to maintain a sanitary condition.

In order to comply with the Regulations and obligations under the Occupational Health and Safety Act, employers should familiarize themselves with the sector specific public health recommendations for their businesses.

#3 – Layoffs become IDEL under the ESA

As we reported in our publication, on May 29, 2020, the Ontario Government published Regulation 228/20 under the Employment Standards Act, 2000 (ESA) which fundamentally and retroactively altered the treatment of layoffs and reductions in hours that occur during the pandemic by deeming them to be Infectious Disease Emergency Leave (IDEL) and not layoffs. 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.

The Regulation also declared reductions in hours and/or wages during the pandemic not to be a constructive dismissal. In order for this provision of the Regulation to apply, the reduction in hours and/or wages must also be related to COVID-19 and occur during the defined COVID-19 period. Note that the Regulation does not change any entitlements for unionized employees.

# 4 – Bill 195 Starts the Countdown to end Layoffs being IDEL under the ESA

As noted above, the declaration of the state of emergency in Ontario ends today. This means that the six-week period in the definition of “COVID-19 period” described above starts today. Effective September 4, 2020, employees who are not working due to COVID-19, or whose hours have been reduced by 50% or more, will no longer be considered on IDEL and instead will be laid off for the purposes of the ESA. Further, employees whose hours and wages are reduced will be able to bring constructive dismissal claims under the Act before the Ministry of Labour.2

On a related note, the end of the declared emergency will also eliminate one of the two COVID-19 related leaves added to the ESA on March 19, 2020. Bill 186 created two COVID-19 related leaves under the Act. The first provides a job-protected leave for employees unable to work because of an emergency declared under section 7.0.1 of the EMCPA. The second leave relates directly to infectious diseases. With the end of the declared emergency, the first leave will no longer apply but the second leave will continue. To summarize, as of July 24, 2020, an employee will no longer be entitled to a leave for the following reasons:

  • Because of an order that applies to him or her made under section 7.0.2 of the EMCPA;

  • Because of an order that applies to him or her made under the Health Protection and Promotion Act (HPPA); or

  • Because he or she is needed to provide care or assistance to an individual referred to in the list below3.

Employees will continue to be entitled to a leave for the following reasons:

  • The employee is under individual medical investigation, supervision or treatment related to COVID-19;

  • The employee is acting in accordance with an order under the HPPA that relates to COVID-19;

  • The employee is in quarantine or isolation or is subject to a control measure (which may include, but is not limited to, self-isolation), and the quarantine, isolation or control measure was implemented as a result of information or directions related to COVID-19 issued to the public, in whole or in part, or to one or more individuals, by a public health official, a qualified health practitioner, Telehealth Ontario, the Government of Ontario, the Government of Canada, a municipal council or a board of health, whether through print, electronic, broadcast or other means;

  • 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 COVID-19

The employee is providing care or support to an individual from the list of family members4 because of a matter related to COVID-19 that concerns that individual, including, but not limited to, school or day care closures; or

  • The employee is directly affected by travel restrictions related to COVID-19 and, under the circumstances, cannot reasonably be expected to travel back to Ontario.

Note that the above leave provisions do not apply to employees who are covered by certain redeployment Orders applicable to front-line workers issued under the EMCPA and continued under the Reopening Ontario Act.

#5 – Federal Government Extends CERB for 8 weeks.

On June 26, 2020, the federal government filed Interim Order No. 5 amending the Employment Insurance Act (Employment Insurance Emergency Response Benefit). The order extends the Canada Emergency Response Benefit (CERB) increasing the timeframe for eligibility from 16 to 24 weeks. This Interim Order is deemed to have come into force on March 15, 2020. That means that the CERB benefit is available from March 15, 2020, to October 3, 2020. Applicants can apply no later than December 2, 2020, for payments retroactive to within that period. The amount of the CERB continues to be $500.00 per week and is taxable but paid out without deductions. Applications are through Service Canada or Canada Revenue, and applicants can renew their application every two weeks or apply for a full four-week period depending on which application process they use.

#6 – Federal Government Extends CEWS

On July 20, 2020, the federal government introduced Bill C-20, An Act respecting further COVID-19 measures. The Bill passed Third Reading on July 21, 2020. Among other things, Bill C-20 expands the Canada Emergency Wage Subsidy (CEWS).

As per the announcement, on July 17, 2020, Bill C-20 amends the Income Tax Act to:

  • Extend the CEWS until December 19, 2020;

  • Extend the CEWS to more employers with reductions in revenues that are less than the original 30% threshold;

  • Introduce a gradually decreasing base subsidy to all eligible employers that is proportional to their revenue reduction; and

  • Introduce a top-up subsidy of up to an additional 25% for employers that have been most adversely affected by the pandemic.

The Bill C-20 changes follow the federal government’s amendments to the Income Tax Regulations (ITR), which were published on June 30, 2020, that extended the existing Wage Subsidy for an additional four-week qualifying period, starting on June 7, 2020, and ending on July 4, 2020.

The new rate structure under the CEWS is fairly complex and beyond the scope of this overview. More details can be found in the government’s backgrounder that was published on July 17, 2020.

#7 – Bill 197

Also on July 21, 2020, Bill 197, COVID-19 Economic Recovery Act, 2020 received Royal Assent. Bill 197 is an omnibus bill that amends a number of statutes. Of interest to employers are the amendments to the Occupational Health & Safety Act, adding the power to adopt codes, standards, criteria and guides as they may be amended from time to time. This will allow the government to update health and safety standards without having to formally introduce regulatory amendments.

#8 – Federal Government Announces Paid Sick Leave

On July 17, 2020, the federal government announced that the Safe Restart Agreement between the federal and provincial governments will include paid sick leave.

Where not already available, provinces and territories will be required to establish job-protected sick leave, through regulation or legislation, that allows workers to take up to 10 days leave related to COVID-19. Further, the government would provide funding for a temporary income support program that will support workers who do not already have access to other paid sick leave for the 10 days.

#9 – Federal Workplace Violence & Harassment Regime in Force

On June 17, 2020, the federal government proclaimed in force the new workplace violence and harassment requirements under the Canada Labour Code, which were included in Bill C-65, Budget Implementation Act, 2017, No. 1. and Regulations. The amendments are scheduled to come into force on January 1, 2021. The amendments expand federally regulated employers’ obligation to investigate, record, report, prevent and respond to workplace harassment and violence, including sexual harassment and sexual violence. These obligations include:

  • Developing a workplace policy;

  • Conducting a workplace assessment;

  • Developing emergency procedures;

  • Implementing a training program;

  • Providing support services;

  • Establishing a resolution process; and

  • Keeping records of requirements.

#10 – Court of Appeal on the Enforceability of Termination Clauses

On June 17, 2020, the Ontario Court of Appeal (the “Court”) rendered an important decision regarding the enforceability of termination clauses, and severability clauses in employment agreements. In Waksdale v. Swegon North America Inc. (“Waksdale”), the Court held that:

  1. An employment agreement must be read in whole, not piecemeal. This means that where one termination clause in a termination provision in an employment agreement is unlawful and unenforceable (in this case the ‘for cause’ clause), the entire termination provision is rendered unenforceable, even if:

    1. the other clauses comply with the ESA and would be enforceable as standalone clauses; and

    2. a lawful clause is what is being relied upon by the employer.

       2.Severability clauses cannot be relied upon in employment agreements to remove the unenforceable clauses and save the lawful clauses in a termination provision.

Under the ESA Regulations, the standard for a termination where the employer may dismiss without notice is where the employee is “guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.” Plaintiff counsel have argued, and the courts have now agreed, that the common law “cause” or “just cause” standard is less stringent than the ESA “wilful misconduct” standard. It is now accepted that there can be misconduct that is serious enough to be “just cause”, but not be “wilful misconduct”. As such, a clause that disentitles an employee to notice of termination based on the lower standard of just cause is not compliant with the ESA because it is possible that the employee is entitled to notice under the ESA.

The impact of the Waksdale case for provincially regulated employers in Ontario is that a just cause termination clause that says employees can be terminated without notice or compensation, and makes no exception for the wilful misconduct standard under the ESA, could render the entire termination clause unenforceable – even if the employer is not asserting cause.

Honourable Mention- NHL HUB Regulation

For hockey fans out there, Regulation 414/20 approved that an NHL Hub can be established in the City of Toronto if approved by the Chief Medical Officer of Health.

Footnotes:

Regulation 363/20, Regulation 364/20, Regulation 414/20, Regulation 415/20 Regulation 420/20

2 Whether the ESA Regulation changed the common law regarding constructive dismissal and limited claims remains a matter of debate.

3 1. The employee’s spouse. 2. A parent, step-parent or foster parent of the employee or the employee’s spouse. 3. A child, step-child or foster child of the employee or the employee’s spouse. 4. A child who is under legal guardianship of the employee or the employee’s spouse. 5. A brother, step-brother, sister or step-sister of the employee. 6. A grandparent, step-grandparent, grandchild or step-grandchild of the employee or the employee’s spouse. 7. A brother-in-law, step-brother-in-law, sister-in-law or step-sister-in-law of the employee. 8. A son-in-law or daughter- in-law of the employee or the employee’s spouse. 9. An uncle or aunt of the employee or the employee’s spouse. 10. A nephew or niece of the employee or the employee’s spouse. 11. The spouse of the employee’s grandchild, uncle, aunt, nephew or niece.12. A person who considers the employee to be like a family member, provided the prescribed conditions, if any, are met. 13. Any individual prescribed as a family member for the purposes of this section.

4 See note 3

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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