Government of Ontario, Canada Issues New Regulation Favourable to Employers During the COVID-19 Pandemic

Updated July 21, 2020

On May 29, 2020, the government of Ontario filed Ontario Regulation 228/20 (Regulation) under the Employment Standards Act, 2000 (ESA).  The Regulation amends layoff and constructive dismissal rules exclusively under the ESA, and in most cases, eliminates temporary layoffs and the risk of a constructive dismissal claim under the statute for a defined “COVID-19 period,” during which many employers in Ontario have had to close or reduce operations. 

Notably, this Regulation:

  • Does not apply to employees in unionized workplaces who will continue to be subject to the ESA’s temporary layoff rules;
  • Applies to assignment employees employed by temporary help agencies, with necessary modifications; 
  • Confirms that COVID-19 is designated as an infectious disease for the purposes of the ESA and the Infectious Disease Emergency Leave created on March 19, 2020, to which both unionized and non-unionized employees are entitled, retroactive to January 25, 2020; and     
  • Defines the “COVID-19 period” as the period beginning on March 1, 2020, and ending six weeks after the government-declared emergency in response to the COVID-19 crisis is terminated or disallowed. (The emergency was declared on March 17, 2020. The expiry date for the declaration of emergency has been extended several times and is currently in effect until July 24, 2020.) 

Employees deemed to be on Infectious Disease Emergency Leave

The Regulation provides that an employee who, any time during the COVID-19 period, does not perform the duties of their position because their work hours are temporarily reduced or eliminated by their employer for reasons related to COVID-19, is deemed to be on Infectious Disease Emergency Leave (Leave). The Leave is a new leave of absence that was added to the ESA on March 19, 2020, in response to the COVID-19 crisis.

Generally, requirements and protections under the ESA that apply to other ESA leaves apply to the deemed Leave. However, if an employee stopped participating in a benefit plan as of May 29, 2020, the employee will not be required to elect in writing not to participate during the COVID-19 period. In addition, if an employer was not, as of May 29, 2020, making employers’ contributions to a benefit plan, the employer will not be required to make them during the COVID-19 period. Payments or benefits the employee received from the employer starting on March 1, 2020, and ending on May 29, 2020, are unaffected.

The Regulation contains a detailed list of circumstances in which an employee will not be deemed to be on Leave.

Employees deemed not to be laid off

The Regulation deems an employee not to be laid off if the employee’s hours are temporarily reduced or eliminated, or if the employee’s wages are temporarily reduced for reasons related to COVID-19 during the COVID-19 period, except where the layoff is due to a permanent discontinuance of all the employer's business at an establishment. This does not apply to an employee who, before May 29, 2020: 

  • Had their employment terminated because they were laid off for a period longer than the period of a temporary layoff; or
  • Had their employment severed because they were laid off for 35 weeks or more in any period of 52 consecutive weeks.

Actions deemed not to constitute a constructive dismissal

The Regulation deems a temporary reduction or elimination of an employee’s hours of work, or a temporary reduction in an employee’s wages, not to constitute constructive dismissal, if it occurs during the COVID-19 period for reasons related to COVID-19.  This does not apply to an employee whose employment was terminated or severed when the employer constructively dismissed the employee and, in response, the employee resigned within a reasonable period, before May 29, 2020.

Complaints deemed not to have been filed

The Regulation provides that, with some exceptions, a complaint filed with the Ministry that a temporary reduction or elimination of an employee’s hours of work, or a temporary reduction of an employee’s wages by the employer, constitutes the termination or severance of the employee’s employment, is deemed not to have been filed if the temporary reductions occurred during the COVID-19 period for reasons related to COVID-19.  The Regulation contains a detailed list of complaints that will not be deemed not to have been filed.

Guidelines for determining if an employee’s hours of work or wages have been reduced

The Regulation establishes detailed guidelines for determining if an employee’s hours of work or wages are considered reduced.

Bottom line for employers

The new Regulation provides considerable relief to employers of employees who are not members of a union.  However, it remains to be seen how layoffs and constructive dismissals that occur during the pandemic will be viewed by the courts under the common law. 

Furthermore, it is important that employers recognize that the Regulation is highly complex.  For example, as noted above, it contains a detailed:

  • List of circumstances in which an employee will not be on Leave;
  • List of complaints that will not be deemed not to have been filed; and
  • Set of guidelines for determining if an employee’s hours of work or wages are considered reduced. 

Before reducing their employees’ hours or wages, or before temporarily laying off their employees, employers are strongly encouraged to seek guidance from experienced legal counsel regarding the complexities of the Regulation, and its application. 

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.