COVID-19 continues to have a dramatic impact on both our economy and social interactions. With most workplaces functioning and schools reopening, we have started to see an uptick in new COVID-19 cases. With the increase in infections comes an overall increase in health risks, and as such, the Government of Ontario has responded by re-introducing modified Stage Two measures in some hotspot areas, including the reduction of gathering limits and the closure of indoor dining. Accordingly, it is possible that we may continue to see our progress towards returning to our “new normal” slow down and even revert to more restrictive temporary norms.
As we continue to manage the COVID-19 pandemic, employees and employers should be mindful of the consequences and considerations these restrictions carry, as well as the possibility of a second lockdown. We specifically expect that businesses will continue to adjust their operations and practices, including potentially reducing their workforces to remain economically stable and viable.
Following the initial lockdown in March 2020, thousands of employees across all industries were immediately placed on temporary layoffs. More specifically, many employees were placed on temporary layoffs regardless of whether their employment contracts allowed their employer to do so.
In normal circumstances, a temporary reduction and/or elimination of hours or wages, or a layoff not provided for under the employment contract, may provide an employee with a claim for constructive dismissal.
However, with the introduction of the Infectious Diseases Emergency Leave in late May, all layoffs that occurred from March 1, 2020, onward were immediately converted to deemed job-protected leaves. As a result, employers are effectively allowed to keep employees on an unpaid leave for reasons arising from the COVID-19 pandemic. This significantly undermines an employee’s claim for constructive dismissal and the associated protections afforded for a transition to alternative employment.
The Government of Ontario has now extended the Infectious Diseases Emergency Leave, or the period of protected layoff, to January 2, 2021, meaning that any employee who has experienced a reduction or elimination of hours for reasons related to the COVID-19 pandemic between March 1, 2020, and January 2, 2021, will continue to be on a deemed job-protected leave. As such, these employees will not be considered to have been terminated under the Employment Standards Act, 2000 (the “ESA”), and failure to recall an employee prior to this date will not trigger termination of employment.
Effective January 3, 2021, subject to further amendments to the legislation, we expect the regular rules under the ESA surrounding temporary layoffs and constructive dismissal to apply once again. As such, any significant reduction or elimination of an employee’s hours of work or wages may constitute a constructive dismissal, regardless if it is a result of and/or in response to the COVID-19 pandemic. Furthermore, the temporary layoff “clock” will once again begin to run, and employers, subject to some exceptions, will have up to 13 weeks to recall their employees or may be responsible for the notice of termination and severance pay provisions prescribed by the ESA.
Despite the changes to the legislation, and the limited ability for employees to act during the Infectious Diseases Emergency Leave “COVID-19 Period”, both employers and employees should be mindful that common law remedies for constructive dismissal and illegal layoffs remain an option. These remedies may provide for significantly more than what an employee would be owed under the ESA.
To remain economically viable with government-mandated closures of businesses, we may see employers forced to restructure their businesses, or reduce their workforces. As such, employers are advised to ensure that the dismissals of employees are effectively managed to prevent claims of wrongful dismissal and/or damages relating to bad-faith conduct.
Each individual termination that is being contemplated should be reviewed to ensure that the dismissal is being managed in a way that is consistent with all relevant and applicable laws, including employment standards and human rights legislation. Specifically, in dismissing an employee, employers are required to do so in accordance with the applicable employment standards legislation and the common law, including providing the employee with the appropriate notice, or pay in lieu of notice, and any severance owed, if applicable.
Furthermore, employers are strongly discouraged from dismissing employees in a manner that is inconsistent with human rights legislation, such as finding an employee’s request for accommodation to be a “burden”, as this may lead to an application under Ontario’s Human Rights Code.
Both employers and employees will want to review the termination provisions contained within any employment agreements that may exist to determine whether the contract restricts the employee to minimum employment standards only upon termination, or whether common law remedies are available.
As COVID-19 continues to strain the economy, we expect that most employers will make decisions that are focused on survival, with growth being at best a secondary consideration. We may also see workforces shrink on both a temporary and permanent basis. Employers should therefore be mindful of the evolution of their responsibilities to their employees under the ESA. Employees would also be wise to monitor changes to the laws to maximize the chance that they receive sufficient support from their existing employers, whether it be through a recall to their position or financial assistance to enable them to transition to alternative employment.
By Sharaf Sultan, Principal
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