Updated September 8, 2020: As noted below, on July 24, 2020, Ontario initially suspended the effect of the layoff provisions in the ESA as they relate to non-union employees until September 4, 2020.  On September 3, 2020, Ontario announced a further extension until January 2, 2021, providing further relief to employers in the province.  The government recognizes that termination and severance obligations can create a significant financial burden for businesses and sometimes result in their closure, and it took these steps to help them survive. Furthermore, pursuant to O. Reg. 492/20:  Infectious Disease Emergency Leave, filed on September 3, 2020, the COVID-19 period now ends on January 2, 2021.

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On July 24, 2020, Ontario’s new Bill 195, Reopening Ontario (A Flexible Response to COVID-19) Act, 2020, became law. In accordance with Bill 195, Ontario’s Emergency Declaration has ended (subject to the provincial government’s ongoing authority to extend certain existing emergency orders). One of the implications of ending the Declared Emergency is to trigger the winding down of a recent exemption to the temporary layoff provisions under the Employment Standards Act, 2000 (the “ESA”).

Pursuant to Ontario Regulation 228 / 20 (“Regulation 228”), any non-union employee whose wages were temporarily reduced or whose hours of work were temporarily reduced or eliminated during the COVID-19 Period due to the pandemic was deemed to be on infectious disease emergency leave (“IDE Leave”), rather than on layoff. Regulation 228 effectively rendered the temporary layoff provisions in the ESA inapplicable during the COVID-19 Period, except where the layoff was due to a permanent cessation of all of the employer’s business, and provided protection from constructive dismissal claims under the ESA during the COVID-19 Period. In doing so, Regulation 228 provided considerable relief to employers and offered flexibility in navigating COVID-19 issues.

Regulation 228 defined the COVID-19 Period as commencing on March 1, 2020 and ending six weeks after the Emergency Declaration has ended: namely, September 4, 2020.  After September 4, such employees will no longer be deemed to be on IDE Leave. Because of this, an employer will now have to decide whether to:

• recall employees and decide whether or not to access the Canada Emergency Wage Subsidy program (CEWS)
• place employees on temporary layoff under the ESA (although the potential issue of constructive dismissal might remain at common law absent a contractual provision allowing for layoff)
• recognize that an employee is eligible (if qualifying conditions are met) for ongoing IDE Leave (or any other applicable ESA leave or a leave under company policy or an employment contract).

Because IDE Leave is a statutorily protected leave under the ESA, an employee is entitled to reinstatement to the same position upon completion of the leave or to a comparable position (assuming that either position is available).

If an employer chooses temporary layoff under the ESA, then the clock will start ticking on deemed termination of employment. Under the ESA, the maximum length of a statutory temporary layoff is limited to a number of weeks (either 13 weeks in any period of 20 consecutive weeks, or up to 35 weeks in any period of 52 consecutive weeks if certain conditions are met (e.g., continuation of coverage under a benefit plan)). The employee’s employment will be deemed to be terminated if either limit is exceeded, triggering applicable notice and severance pay obligations. For any employee who was laid off prior to March 1, 2020, that period of layoff prior to March 1 will count in the calculation of time under the 35-week approach.

Once an employer decides how to manage its workforce in light of Bill 195, it needs to consider appropriate communications with employees.

Bottom Line for Employers

In light of the pending September 4 deadline, employers will have to consider carefully their available options with respect to employees who are not currently working. Employers are encouraged to seek legal guidance with respect to their specific circumstances regarding this transition period, especially if unable to resume full and regular operations after September 4 via a recall of employees.