Big Changes to COVID-19 Layoffs Under the ESA

A new regulation under the Employment Standards Act (ESA) has made significant changes to employer and employee rights in Ontario during the COVID-19 pandemic:

1. The ESA’s temporary layoff rules no longer apply to employees whose wages or work hours have been temporarily reduced or eliminated due to COVID-19. This means there are no more 13- or 35-week limits on COVID-19 related layoffs.
2. For ESA purposes, employees cannot be constructively dismissed by reducing or eliminating their wages or work hours due to COVID-19. However, temporary layoffs or hour or wage reductions may still be a constructive dismissal under the common law even if COVID-19 related.
3. Employees whose work hours have been temporarily reduced or eliminated due to COVID-19, including employees on temporary COVID-19 layoffs, are deemed to be on a job-protected leave of absence. This means that once the COVID-19 pandemic is over, employers must reinstate them to their same positions (or a similar position, if the same position no longer exists), just like employees on other ESA leaves.

These rules do not apply to employees whose 13- or 35-week temporary layoff period already expired, who already quit in response to an alleged constructive dismissal, or who were permanently terminated prior to May 29, 2020. The rules will remain in effect until six weeks after the COVID-19 state of emergency is lifted.

Generally, these are welcome changes for employers and will provide much needed flexibility in managing their workforces during this difficult time. However, employers must bear in mind that temporary layoffs or wage reductions may still be a constructive dismissal at common law. Employers must also be much more careful about terminating employees who are currently on temporary layoffs now that these employees have been granted a job-protected leave.