Ontario enacts new regulation regarding COVID-19 layoffs and wages reductions
On Friday, May 29, 2020, the Ontario government enacted a new regulation under the Employment Standards Act, 2000 (“ESA”).
The new regulation grants significantly more flexibility to employers needing to temporarily reorganize their workforces during COVID-19, in an apparent response to protect the solvency of more Ontario businesses. It also aims to safeguard the jobs of employees whose employers intend on recalling them to work.
Among the most significant changes are that employers may now lay off employees or reduce their hours and/or wages “for reasons related to” COVID-19 without triggering the employees’ termination entitlements. However, the layoffs or hours/wages reductions:
- Must be temporary in nature;
- Only apply to non-unionized employees; and,
- Will only be permitted from March 1, 2020 until 6 weeks after the end of the declared state of emergency in Ontario.
Any claims already filed for termination entitlements under the ESA are deemed to have not been filed.
Previously, employees who were laid off for more than 13 or 35 consecutive weeks, depending on the circumstances, would be deemed terminated and employer would owe the employees their termination entitlements under the ESA.
However, it is important to note that these amendments to the ESA do not oust employees’ common law rights. Some employees may be able to claim that their layoff or hours/wages reduction constitutes a constructive dismissal at common law, giving rise to common law termination entitlements.
Both employees and employers should seek advice from an employment lawyer prior to making any decisions regarding layoffs, hours/wages reductions, or claiming constructive dismissal. Reach out to one of our experienced employment lawyers for more information.