On May 29, 2020, a new regulation to Ontario’s Employment Standards Act (ESA) was introduced exempting COVID-19-related temporary hours or wage reductions from the usual layoff and constructive dismissal provisions.
These changes provide welcome clarity and relief to employers that have faced difficult decisions in the face of COVID-19 shutdowns. Many employers, particularly those deemed to be non-essential, have had to reduce employee hours or wages, and in some cases, lay off staff, taking on the risk of constructive dismissal claims under the ESA. For employers covered by the new regulation, that risk of statutory non-compliance has now been eliminated. The regulation is expected to curb a potential rise in constructive dismissal complaints under the ESA.
The regulation establishes that neither a COVID-19 Hours Reduction nor a COVID-19 Wage Reduction will constitute a layoff or a constructive dismissal under the ESA. For the purpose of the regulation, a “reduction” in hours or wages is considered to have occurred if:
An employee who has experienced a COVID-19 Hours Reduction and who, as a result, does not perform the duties of their position during the COVID-19 Period, is deemed to be on an Infectious Disease Emergency Leave (a statutory leave of absence). Such employees are subject to the same rights and obligations as other employees on a statutory leave of absence, subject to the following exceptions:
Any complaint filed by an employee with the Ministry of Labour which alleges that a COVID-19 Hours Reduction or COVID-19 Wage Reduction constitutes the termination or severance of their employment is deemed not to have been filed.
The regulation is subject to the following exceptions:
Although the regulation provides statutory protection to employers who seek to impose hours and/or wage reductions as a result of COVID-19, it may not entirely eliminate the risk of a common law constructive dismissal claim. It remains to be seen how courts will address constructive dismissal claims in light of COVID-19, or how this regulation may impact the court’s analysis. We expect that employers will rely on this regulation in defending any common law constructive dismissal claims that may arise in the future.
Read all our coronavirus-related updates on our COVID-19 guidance for organizations resource page.
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