Jun 2, 2020

COVID-19 Update: Do Reduced Hours of Work or a Temporary Lay Off Constitute a Termination or a Constructive Dismissal? The legal waters just got murkier

The Ontario government has just amended the Employment Standards Act (the “ESA”) to address reduced hours of work and layoffs caused by COVID-19. A copy of the new law is found here.

Essentially, the definition of temporary layoff and constructive dismissal under the ESA has been amended from March 1, 2020 until six weeks after the state of emergency has ended. Employees are deemed to be on unpaid leave under the ESA in these scenarios with some exceptions. The Ontario government is expected to extend that state of emergency until the end of June later today.

This new law will be of particular interest to employers who (i) laid off employees about 13 weeks ago and did not continue their employee benefits, or (ii) laid off more than 50 employees about 13 weeks ago. 

Since a significant reduction in an employee’s hours of work or a temporary lay off is generally considered a termination (or constructive dismissal) at common law, the main issue of interest to most employers is whether this change in the ESA changes the common law. In other words, does a temporary layoff or a reduced workweek still constitute a termination at common law that requires an employer to provide the employee with termination pay? This new law does not explicitly address this issue.

If you want to know your organization’s potential legal exposure in relation to reduced working hours or for laid off employees, please contact me at 416 317-9894 or at [email protected]

 

 

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