Ontario employers: ESA temporary layoff rules suspended until
July 3, 2021

21 December 2020

On May 29, 2020, the province of Ontario introduced Ontario Regulation 228/20 – Infectious Disease Emergency Leave Regulation ("Regulation") under the Employment Standards Act, 2000 ("ESA"), in response to the COVID-19 pandemic. We discussed this legislative change in our Insight article dated June 1, 2020, Layoff and termination provisions of Ontario ESA partially suspended during COVID-19.

The Regulation was introduced to provide employers with relief from the standard temporary layoff, termination and severance pay provisions under the ESA. The Regulation was intended to be in place for a brief period, with several relief provisions set to expire on September 4, 2020. However, in the period leading up to September 4, 2020, it became clear that many employers would not be able to return to full-scale operations in the near future. As a result, the province extended the relief provisions under the Regulation until January 2, 2021.

Due to recent surge in COVID-19 cases, and lockdowns / restrictions introduced to stop the spread of the virus, many businesses are incapable of re-opening or remaining open. In an effort to assist these employers, the province has announced a second extension of the temporary relief measures under the Regulation, which will now expire on July 3, 2021.

These legislative changes provide critical, ongoing relief to employers that continue to suffer substantial business disruptions because of the COVID-19 pandemic. Key legislative relief provisions are detailed below:

A) Deemed IDEL and the "COVID-19 Period"

The Regulation provides relief from the temporary layoff, termination and severance rules under the ESA by creating a new category of deemed "Infectious Disease Emergency Leave" (called "deemed IDEL"). Deemed IDEL applies where a non-unionized employee's "hours of work are temporarily reduced or eliminated by the employer for reasons related to [COVID-19]". Where these requirements are met, the Regulation deems an employee to be on deemed IDEL, rather than a "temporary layoff" under the ESA.

As per the Regulation, an employee can remain on a deemed IDEL until the end of what the province calls the "COVID-19 Period". Before the province's recent extension, the "COVID-19 Period" was set to expire on January 2, 2021.

As a result of the recent changes to the Regulation, the COVID-19 period will now run until July 3, 2021. A non-unionized employee whose hours of work continue to be temporarily reduced, eliminated, or whose wages have been reduced due to COVID-19, can remain on deemed IDEL until July 3, 2021.

B) Deemed IDEL is not a Temporary Layoff

Under normal circumstances, the ESA allows a temporary layoff to last for up to 13 weeks within a 20-week period, or (if the employee is in receipt of certain prescribed benefits), up to 35 weeks within a 52-week period.

However, employees who are on "deemed IDEL" are not considered to be on "temporary layoff". The employees are essentially deemed not to be on layoff for the purposes of the termination and severance provisions of the ESA. For these employees, the Regulation provides that the ESA's standard termination and severance rules do not apply. If they are not recalled to work, employees can remain on deemed IDEL until July 3, 2021.

C) No Constructive Dismissal under ESA

Under normal circumstances, an employee suffering a temporary wage reduction or elimination / temporary reduction in hours of work can file a complaint alleging that they have been constructively dismissed under the ESA.

During the "COVID-19 Period", the Regulation prevents employees on deemed IDEL from claiming that they have been constructively dismissed in the following circumstances:

  • As a result of COVID-19, the employee has suffered a temporary reduction or elimination of their hours of work;
  • As a result of COVID-19, the employee has suffered a temporary reduction in wages.

Key Takeaways for Employers

While this extension represents a welcome reprieve for many businesses experiencing substantial disruption due to the COVID-19 pandemic, the legislation is quite technical and there are a number of exceptions. Similarly, there are detailed rules related to benefits continuation and other matters for employees on deemed IDEL. Please refer to our previous Insight article on deemed IDEL for a more complete discussion of the Regulation.

Employers should bear in mind that the Regulation only affects the ESA rules related to layoffs, terminations and constructive dismissal. The interaction between the Regulation and the common law remains unclear.

Based on the Regulation as currently in force, the COVID-19 Period will come to an end on July 3, 2021, and the standard rules under the ESA regarding layoffs, terminations and constructive dismissal will resume.

At present, it is too early to tell whether this extension of the COVID-19 Period will be the last. Based on the current surge in COVID-19 case growth, many employers may not be in a position to resume full-scale operations by July 3, 2021. Accordingly, as we move into the New Year, we encourage employers to seek legal counsel to assist with assessing common law risks and strategic considerations.

For any questions you may have about Regulation 228/20, the deemed IDEL, temporary layoffs, common law liabilities or any other issues related to COVID-19, the Gowling WLG Employment, Labour & Equalities Group would be pleased to assist. To find out more about our Group, and how to contact a specific lawyer, click here.

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