Ontario employers: ESA temporary layoff rules suspended until September 25, 2021

8 minute read
17 June 2021

On May 29, 2020, Ontario introduced 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 initially set to expire on September 4, 2020.

First extension

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. As a result, the province extended the relief provisions under the Regulation until January 2, 2021.

Second extension

As COVID-19 cases continued to rise during the second wave, Ontario sought to provide ongoing relief to employers by extending the foregoing temporary relief measures until July 3, 2021. We highlighted this development in our Insight article dated December 21, 2020, Ontario Employers: ESA Temporary Layoff Rules Suspended until July 3, 2021.

Third (most recent) extension

On June 4, 2021, the province introduced Regulation 412/21 – Infectious Disease Emergency Leave, which has the effect of extending the ESA temporary layoff rules until September 25, 2021. This welcome legislative change provides critical, ongoing relief to employers that continue to suffer substantial business disruptions because of the COVID-19 pandemic.

Gowling WLG focus

Summarized below are key details about the Regulation and the relief it provides to Ontario businesses:

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.

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 July 3, 2021.

As a result of the recent changes to the Regulation, the COVID-19 period will now run until September 25, 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 September 25, 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 September 25, 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 for the purposes of the ESA 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.

Notably, a recent Ontario decision, confirmed that placing an employee on IDEL similarly does not constitute a constructive dismissal under the common law.  

Key takeaways for employers

Although the third wave is receding, vaccination rates are increasing, and restrictions are starting to lift, many employers would not have been able to resume normal operations, and recall employees from deemed IDEL, in the 13- or 35- week period following July 3, 2021.

This critical extension provides much needed relief to businesses in Ontario's hardest-hit sectors. As a result of this change, affected employees will continue to be on deemed IDEL and employers will have additional time to resume full-scale operations.

There is some indication that this extension of the COVID-19 Period may be the last. If no further extension is implemented, the standard temporary layoff and constructive dismissal rules under the ESA will once again take effect on September 25, 2021. As we contemplate the possible implications of a fourth wave, we encourage employers to seek legal counsel to assist with assessing common law risks and strategic considerations before the standard ESA provisions are reinstated.

For any questions you may have about Regulation 228/20, the deemed IDEL, temporary layoffs, constructive dismissal, 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.

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