As the COVID-19 Pandemic continues to rage and businesses are once again forced to shutter, more and more employees are finding themselves on the receiving end of a temporary layoff or a termination. For those employees who are placed on a temporary layoff, their job security and prospects of a return are left up in the air, resulting in further stress, anxiety, and insecurity in an already precarious and uncertain time.
Fortunately, employees should rest assured that the law is generally on their side, and they do have options to challenge the temporary layoff as an unlawful breach of the employment relationship and/or a constructive dismissal.
Some employers have argued that temporary layoffs during the COVID-19 pandemic are lawful, due to the Government of Ontario has created recently enacted Infectious Disease Emergency Leave (“IDEL”). However, it is important to understand the subtle differences between an infectious disease leave and a layoff.
For a s. 56 Employment Standards Act, 2000 (“ESA”) temporary layoff to be lawful, the employee must have somehow agreed to a layoff as forming a part of the employment relationship. This occurs by either: (1) agreeing to a temporary layoff in the past (i.e. due to the seasonal nature of the industry you agree to be laid off every summer) or (2) agreeing to an employment contract that specifically permits temporary layoffs for the applicable thirty-five (35) week period. If the employee was never subject to temporary layoffs in the past, not subject to an employment agreement that stipulates that their employment may be subject to layoffs and/or did not condone the layoff in question, the employee can take the position that the layoff was a breach of the terms of employment, and/or constructive dismissal.
However, IDEL is not a layoff under the ESA and the ESA layoff provisions do not apply to an IDEL, which is governed by O. Reg. 228/20. The regulation is designed to provide employers with temporary relief from various obligations under the ESA and qualifies as statutorily protected job leave. Permitted leaves of absence are determined by the ESA and include parental, critical illness and bereavement leave, etc.
IDEL creates a separate category of statutorily permitted leaves applicable only to non-union employees for the period of March 1, 2020, to July 3, 2021 (the “COVID-19 Period”). Employees do not have a right to this leave, unlike other leaves. The employer under IDEL is required to reinstate the employee to a comparable position or to the same position with the same salary and benefits immediately after their return from an infectious disease leave, like other statutory leaves. Said in another way, employees cannot be terminated or penalized for being placed on an IDEL and employee benefits must be continued.
Crucially, IDEL permits employers to temporarily reduce or eliminate employees’ hours of work for reasons related to COVID-19 and can apply in the following circumstances amongst others:
- An employee is directed to enter isolation or quarantine;
- An employee is investigating whether they have contracted or encountered an individual with COVID-19;
- The employer orders the employee not to work because of a likelihood that COVID-19 may be spread at work;
- An employee must care for a person due to a reason related to COVID-19 such as a school or day-care closure;
- An employee is unable to return to Ontario due to travel restrictions.
Therefore, employers may temporarily reduce or eliminate an employee’s hours or wages throughout the COVID-19 period without triggering the obligation to pay termination and severance pay amongst other obligations. This infectious leave has the hallmarks of a layoff, including the “temporary” reduction in pay, the obligation to continue benefits, but you may be terminated at the end of the layoff period versus you must return to work at the end of an infectious leave.
This leads to potential abuse by employers: they use the IDEL provisions mistakenly (or intentionally) and call it a “temporary layoff” with the hope the hard-working employee gives up and seeks new employment before July 03, 2021. It opens the door for misinformed employees to believe they are on a temporary lay-off when they are not. It is not an opportunity for employers to place employees on a leave of absence in perpetuity, without any semblance of a recall date, which we are finding to be the case. Instead, employees who are subject to reduced hours or wages due to COVID-19 will be deemed to be on a job-protected leave.
Some employers have taken the position that even if the layoff was unlawful, the employee may be subject to an employment agreement that limits their severance pay to the minimum entitlements set out by statute. Fortunately, there have been a number of recent developments in jurisprudence, in which courts have set substantial thresholds for employers to satisfy in drafting legally enforceable employment agreements, to limit an employee’s severance. In the seminal case of Waksdale v. Swegon v. North America, the Ontario Court of Appeal reinforced the notion that if an employment agreement purports to offer an employee fewer entitlements then their minimum statutory protections afforded under the Employment Standards Act, 2000 (“ESA”), the termination provision found in the contract (which purportedly restricts the employee’s severance entitlements) is null and of no force.
In that case, the employment agreement stipulated that if the employee was terminated with cause, the employee would not be entitled to any protections or entitlements upon dismissal, even the statutory minimum guarantees as set out in the ESA which employers are still required to provide in a with cause dismissal. In limiting the employee’s entitlements in such a manner, the Court ruled that the employment agreement was a violation of the ESA, and was unenforceable by attempting to contract out of the minimum protections and entitlements set out by statute. This groundbreaking precedent has recently been followed in numerous other cases, such as in Sewell v. Provincial Fruits Co. Limited, and Lamontagne v. J.L. Richards & Associates Limited.
If you have been subject to a temporary layoff and require legal assistance, please do not hesitate to contact us, and we would be more than happy to assist you without delay. At Lecker & Associates, we have been practising Employment & Disability Law for over 35 years. We have the skills and experience to fight for your rights right away.