O. Reg. 228/20- Ontario Government Effort to Avoid Deemed Terminations and the Onslaught of Constructive Dismissal Claims Under the ESA
June 3, 2020
On Friday May 29, 2020, by O. Reg 228/20, Infectious Disease Emergency Leave (“Regulation”), the Ontario provincial government enacted an important new regulation under the Employment Standards Act, 2000 (“ESA”), which materially amends the ESA for the period applying retroactively from March 1, 2020 until 6 weeks after the state of emergency is extinguished (the “COVID-19 Period”). The Regulation does not apply to unionized workplaces.
One of the most significant objectives of this Regulation is to avoid deemed terminations pursuant to the ESA, and the associated financial burden to employers to remit termination and severance pay under the ESA, once the temporary lay-off period under section 56(2) of the ESA had been reached. Rather, subject to limited exemptions, employees will be deemed to be placed on a protected “infectious disease emergency leave”, and not laid off during the COVID-19 Period, when an employee’s hours and/or wages have been reduced or eliminated for “reasons related to the designated infectious disease.”
It appears that this Regulation was intended to provide assistance to employers that temporarily laid off employees in early March 2020 as a result of the pandemic and would otherwise would be required to bring back many employees no later than the 13 week maximum layoff period under the ESA to avoid deemed terminations. Many employers face challenging financial circumstances in light of the reality that non-essential businesses have been shut down completely or earning reduced revenues with limited capabilities to operate, and cannot afford the prospect of these termination costs.
The Regulation further provides that an employer is entitled to temporarily reduce or eliminate employee hours of work and wages during the COVID-19 Period for reasons “related to the designated infectious disease” without triggering a constructive dismissal pursuant to the ESA. Employees have lost their remedy to file a Complaint with the Ministry of Labour to assert that they have been constructively dismissed under these circumstances.
At this point, it is unclear whether the legislature intended to extinguish common law claims for constructive dismissal by virtue of this short Regulation which clearly eliminates constructive dismissal claims pursuant to the ESA during the COVID-19 Period for reduction or elimination of hours and wages “for reasons related” to the designated infectious disease. The Regulation does not define or elaborate on what circumstances satisfy the “reasons related” to the designated infectious disease.
However, it is noteworthy that section 8 of the ESA specifically provides that “no civil remedy of an employee against his or her employer is affected by this Act (ESA).” As such, there is an argument that an employee’s common law right to assert constructive dismissal is not extinguished by this Regulation. The Courts will likely be addressing these novel issues shortly and will need to grapple with the countervailing objectives of business survival for many employers during this pandemic with an employee’s common law right to assert constructive dismissal when there has been a material amendment in compensation or hours of work.
For now, the ticking clock on recall from layoff is eliminated. At this time, the State of Emergency has been extended to June 30, 2020.