The Government of Ontario recently created a new regulation under the Employment Standards Act, 2000 (the “ESA”) in furtherance of its efforts to control and minimize the impact of the COVID-19 pandemic on employment. The new regulation deals with “infectious disease emergency leave” and affects whether non-unionized employees have been terminated or constructively dismissed under the ESA in certain situations.
Generally, when an employee is laid off for a period longer than a temporary layoff, as defined by the ESA, he or she is considered to have been terminated for the purposes of the Act. In such cases, the employee will be entitled to termination and, in some instances, severance pay, as prescribed by the ESA. Further, significant changes to fundamental terms of an employee’s employment, such as a significant reduction in the employee’s hours or wages, generally result in the employee’s constructive dismissal, which is similarly treated as a termination under the ESA and results in the employee having the same termination (and sometimes severance) pay entitlements.
However, the new regulation introduces temporary rules that affect the applicability of the above-noted ESA rules where layoffs and significant changes in employment are COVID-related. Specifically, where an employee has been laid off or experienced a significant reduction in work hours and/or wages for COVID-related reasons, he or she will be deemed to be on a job-protected Infectious Disease Emergency Leave for the purposes of the ESA and will not be considered terminated or constructively dismissed.
Infectious Disease Emergency Leave
Prior to the new regulation, employees could take infectious disease emergency leave if they were not able to perform their employment responsibilities because of a variety of COVID-19-related reasons, including reasons related to childcare, quarantine and travel restrictions, to name a few. Employees on infectious disease emergency leave are generally entitled to the same rights as employees on pregnancy or parental leave, including, but not limited to, the right to reinstatement, the right to continue to participate in employee benefit plans, and the right to be free from penalty.
Essentially, infectious disease emergency leave protects those who cannot perform their job responsibilities for COVID-related reasons from suffering any direct employment consequences.
However, the new regulation now deems employees who would otherwise be considered to have been terminated due to layoff or to have been constructively dismissed, to instead be on infectious disease emergency leave where the circumstances are a result of the pandemic. This means that they are not entitled to statutory termination or severance pay, but do receive the protections afforded by such leave.
These new rules apply retroactively to March 1, 2020 and will expire six weeks after the declared state of emergency in Ontario ends. However, employers will not be required to compensate employees affected by the new regulation for benefits that were discontinued prior to May 29, 2020.
Although the new regulation does remove employees’ entitlements to compensation from their employers for layoffs and significant changes to their employment due to COVID-19, it is an attempt to help preserve more employee-employer relationships through the COVID-19 pandemic. What remains unclear is whether this will have an impact on employees’ abilities to successfully claim that they were constructively dismissed at common law in such circumstances, which would oftentimes result in far greater termination pay entitlements than those provided by the ESA.
Courts have found that temporary layoffs that comply with the ESA and, therefore, do not result in the employee’s termination according to the statute, can still result in an employee’s constructive dismissal at common law. Following this reasoning, the new regulation may not impact how courts interpret constructive dismissal claims resulting from COVID-19. However, the present circumstances are exceptional and unprecedented, and it likely is not possible to predict whether the new regulation will impact common law claims.