Ontario Introduces Deemed Leave of Absence in Connection with COVID-19

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On May 29, 2020, the Government of Ontario enacted O. Reg 228/20, which expanded the scope of the Infectious Disease Emergency Leave under the Employment Standards Act, 2000 (ESA). The key elements of the regulation are described below.

DURATION AND APPLICATION

The provisions of the regulation are retroactive to March 1, 2020, and will continue until six weeks after the declared emergency is terminated (COVID-19 Period).
 
The regulation applies to all non-union employees, other than employees who:

  1. Are dismissed during the COVID-19 Period;
  2. Are laid off during the COVID-19 Period because of a permanent discontinuance of all of the employer’s business at an establishment;
  3. Resign from their employment after receiving notice of termination during the COVID-19 Period;
  4. Resigned from their employment due to constructive dismissal prior to May 29, 2020; or
  5. Were deemed to have been terminated under the temporary layoff provisions of the ESA prior to May 29, 2020.

DEEMED LEAVE OF ABSENCE

The regulation provides that non-union employees whose hours of work are temporarily reduced or eliminated by the employer for reasons related to COVID-19 are automatically deemed to be on Infectious Disease Emergency Leave.
 
As a result, employees who were previously placed on temporary layoff due to COVID-19 will now be deemed to be on Infectious Disease Emergency Leave. Such employees will be able to enjoy the same benefits and protections afforded to employees on other leaves of absence under the ESA.
 
In particular, unless benefits were discontinued prior to May 29, 2020, employees on Infectious Disease Emergency Leave must continue participating in benefit plans unless they elect in writing not to do so.
 
As well, Infectious Disease Emergency Leave is job-protected, which means employers cannot terminate the employment of any employee on such leave unless the dismissal is entirely unrelated to the leave.

NO LAYOFF OR CONSTRUCTIVE DISMISSAL

The regulation provides that a temporary reduction or elimination of work hours and/or a temporary reduction of wages during the COVID-19 Period for reasons relating to COVID-19 will not constitute a layoff or a constructive dismissal under the ESA.
 
The regulation further provides that any complaint filed with the Ministry of Labour alleging that such temporary reduction or elimination of work or temporary reduction of wages constitutes a termination or severance of employment is deemed not to have been filed.

EMPLOYER TAKEAWAYS

Employers should remember the following:

  • Unlike other provinces in Canada that merely extended the periods permitted for temporary layoff, Ontario has taken the unique approach of retroactively converting many temporary layoffs into protected leaves of absence. Employers whose planning centered around what was permissible under the layoff provisions of the ESA may now have to rethink those plans.
  • The regulation will provide employers with the ability to maintain the employment relationship for the length of the emergency declaration and during a six-week transition period thereafter, without any statutory termination or severance pay being triggered. If employers are still unable to return employees to work after the transition period, they may then place employees on a temporary layoff, subject to the layoff provisions of the ESA.
  • Employers are not required to notify employees of their transfer from temporary layoff to job-protected leave, as the change happens automatically and retroactively to March 1, 2020, pursuant to the regulation. However, it is best practice to do so as employees may otherwise be waiting for a recall date that no longer applies, and may assume that their employment has terminated when that date passes.
  • Employers must ensure that they comply with the leave requirements under the ESA, including with respect to benefits continuation—subject to the exception discussed above—and job protection. Employers should also review their pension and benefits plans to determine whether the deemed leave provisions of the regulation could result in any contractual requirement to reinstate pension or benefit contributions during the leave period. 
  • While the reduction or elimination of working hours and compensation in connection with COVID-19 will not constitute a constructive dismissal under the ESA, it remains to be seen whether Ontario courts will take a consistent approach under the common law.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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