Given the fluid nature of the effects of the COVID-19 virus and the ever changing landscape across Canada, the information in this blog is subject to change as the government takes additional precautions and enacts new legislation. Employers and business owners are encouraged to regularly review updated information about COVID-19 from government and other reputable sources.
This blog is intended to supplement and update our blog issued on March 11, 2020.
Many employers are facing financial difficulties during these uncertain times. While some businesses are equipped to have their employees work remotely from home, it is not feasible for certain industries and jobs. Many employers are contemplating whether to temporarily lay off their employees until the situation is resolved. Employers need to recognize that this measure may not be cost-effective as they may be exposing themselves to significant liability in the future depending on the circumstances.
The Employment Standards Act, 2000 (the “ESA”) provides that a temporary layoff is deemed to be a termination of employment if the layoff lasts longer than 13 weeks in any period of 20 consecutive weeks. The ESA also provides that a temporary layoff may last for up to 35 weeks in any period of 52 consecutive weeks in certain prescribed circumstances (such as if the employer continues the employee’s group benefit plan coverage for the layoff period).
Generally speaking, despite the temporary layoff provisions of the ESA, unless the employment agreement contains an express or implied right (i.e. an accepted past practice) to temporarily layoff an employee, an employee can object to the layoff and claim that it is a constructive dismissal. This may trigger an obligation by the employer to provide termination pay, severance pay (if applicable), and potentially common law damages, if the employment agreement does not restrict the employee’s termination entitlements. Even though a lay-off may be temporary, the employer is fundamentally and unilaterally changing the employment relationship and the potential common law damages are generally significantly higher than those required by the ESA.
Notwithstanding the above, if an employee consents to the change in the terms of employment (by agreeing to accept a temporary layoff or reduction in hours), then no constructive dismissal arises. Moreover, if an employee who is temporarily laid off is recalled to work by the employer and declines to accept, they may be found to have failed to mitigate their losses, substantially reducing the amount of their constructive dismissal claim. Employees who are temporarily laid off as a result of a government order to close operations will likely fail to establish that such layoff constitutes a constructive dismissal.
State of Emergency in Ontario
On March 17, 2020 Premier Doug Ford made an order declaring a state of emergency across the province of Ontario which required many establishments to close immediately, including public libraries, licensed child care centres, bars and restaurants (except to the extent that they provide takeout and delivery), theatres, and concert venues. The government also prohibited organized public events of over 50 people. These orders will remain in place until March 31, 2020, at which point they will be reassessed.
The state of emergency was declared pursuant to the Emergency Management and Civil Protection Act (the “EMCPA”). Where such a declaration is made, section 50.1 of the ESA permits employees to take a leave of absence without pay where the employee is unable to perform his or her duties because of the emergency, and as a result of:
- an order made under the EMCPA;
- an order made under the Health Protection and Promotion Act;
- an obligation to provide care to a relative; or
- other reasons as prescribed.
On March 19, 2020, the Ontario Legislature passed Bill 186, the Employment Standards Amendment Act (Infectious Disease Emergencies), 2020. The legislative changes provide job-protected leave to employees who need to be away from work to care for sick relatives or children due to school and day care closures. The changes also provide job-protected leave for those employees in quarantine or isolation due to COVID-19. Employees will not be required to provide a medical note if they need to take such leave, but an employer may request that the employee provide “evidence reasonable in the circumstances, at a time reasonable in the circumstances” to verify the leave.
The legislative changes provide job protection for employees unable to work for the following reasons:
- The employee needs to provide care to a person for a reason related to COVID-19 such as a school or day-care closure.
- The employee is prevented from returning to Ontario because of travel restrictions.
- The employee is under medical investigation, supervision or treatment for COVID-19.
- The employee is in isolation or quarantine in accordance with public health information or direction.
- The employer directs the employee not to work due to a concern that COVID-19 could be spread in the workplace.
- The employee is acting in accordance with an order under the Health Protection and Promotion Act.
These changes, which apply to most employees and employers in Ontario governed by provincial legislation, are retroactive to January 25, 2020, the date when the first COVID-19 case was confirmed in Ontario. It should be noted that because the ESA is provincial legislation, these changes do not apply to federal employees including those working in banks, airports, inter-provincial and international rail, and federal crown corporations.
Employers should also note that during the job-protected leave, they must continue group benefits to employees, provided the employee continues to pay their portion (if any) of the premiums.
Federal Support for Workers and Businesses
The federal government has also introduced changes to support businesses and workers during these trying times. On March 18, 2020, Prime Minister Justin Trudeau announced that the Government of Canada will provide up to $27 billion to support Canadian workers and businesses. The proposed economic measures are intended to stabilize the economy during this period, and include:
- The Emergency Care Benefit which will provide up to $900 bi-weekly, for up to 15 weeks, for Canadians without paid sick leave who are sick, quarantined, or forced to stay home to care for children and do not qualify for EI sickness benefits. This benefit is also available for parents with children who require care or supervision due to school closures, and are unable to earn employment income, irrespective of whether they qualify for EI or not. The applications for these benefits will be available in April 2020.
- An Emergency Support Benefit for Canadians who lose their jobs or face reduced hours as a result of COVID-19. This measure, delivered through the CRA, will provide up to $5 billion for workers who are not eligible for EI.
- The EI Work Sharing Program, which provides EI benefits to those workers who agree to reduce their normal working hours as a result of developments beyond the control of their employers, by extending the eligibility of such agreements to 76 weeks.
- The provision of a temporary wage subsidy to small employers for a period of 3 months. The subsidy will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Employers will be able to reduce the remittances of income tax withheld on their employees’ remuneration.
As of March 15, 2020, the federal government has waived the one-week waiting period for those workers in imposed quarantine that claim Employment Insurance (EI) sickness benefits. The government will also waive the requirement to provide a medical certificate to access EI sickness benefits.