Ontario amends labour laws to aid businesses

Workers to be placed on emergency leave to avoid permanent layoffs, severance pay

Ontario is temporarily amending its labour laws to help businesses avoid permanently laying off workers and paying out severance, putting non-unionized workers who were temporarily laid off or had hours reduced due to COVID-19 placed on an “infectious disease emergency leave.”

Business advocacy groups are applauding the amendment, saying it could save many businesses from bankruptcy as a result of having to pay severance. The Ontario Chamber of Commerce, Canadian Federation of Independent Business and Canadian Manufacturers and Exporters have all been advocating for the measure. But employment lawyers say the amendment could create confusion for workers and may make businesses vulnerable to lawsuits. Advocates for workers add that employees should not be denied access to their severance pay and that the move indicates that insufficient aid has been provided to employers.

The Employment Standards Act requires businesses to officially terminate and pay severance to employees who have been laid off for 13 weeks, or up to 35 in certain cases. Under the amendment, workers will stay on temporary leave, preserving their job while remaining eligible for federal emergency income support programs.

This means, for example, that a worker who was laid off March 16, who would have been entitled to severance pay if not brought back to work by the13-week

mark, is now on leave without severance until the amendment ends.

The amendment to the act applies retroactively to March 1, 2020, and will expire six weeks after the province’s declared state of emergency ends. When the six-week period ends, employees who have still not been brought back are then considered on a temporary layoff for up to 13 weeks, or 35 if the layoff is extended, according to Toronto employment lawyer Jon Pinkus. “The clock restarts,” Pinkus said. Premier Doug Ford announced Monday that he is pushing to extend Ontario’s state of emergency until June 30.

In a statement, Ontario’s minister of labour, Monte McNaughton, said the government has heard “loud and clear” from employers that they don’t want to be forced to terminate their employees.

“As we take the necessary steps to safely and gradually restart the economy, we need to make sure business owners can reopen their doors and workers have jobs to go back to,” McNaughton said in a statement.

The NDP’s employment standards critic, Peggy Sattler, said in a statement Monday that the Ford government is still not properly supporting employers or employees and that changes to the Employment Standards Act need to be made with workers in mind.

“Employees should never be denied access to their severance pay and other basic benefits they earned,” she said, adding “the Ford government has not come forward with the support employers need to keep going. He hasn’t provided small businesses the financial support they need to keep their staff on the payroll.”

According to Statistics Canada, Ontario lost 689,200 jobs in April; the province’s unemployment rate climbed to 11.3 per cent, the highest since 1993.

An estimated 2.2 million people in the province have been affected by the shutdown; 1.1 million have lost their jobs, and another 1.1 million have had their hours significantly reduced.

Julie Kwiecinski, director of Ontario provincial affairs for the Canadian Federation of Independent Business, said her organization has been advocating for temporary layoffs to be extended since March.

Kwiecinski said the approaching 13-week deadline has been weighing heavily on employers, many of whom are just starting to reopen and don’t have the cash to pay severance.

She said she sees the amendment as a “win-win,” since employees will continue to have jobs to look forward to while they claim income support.

“This is great news to small businesses,” she said.

However, Toronto employment lawyer Andrew Monkhouse said he thinks the amendment is less straightforward than it could be — for example, in early April, Alberta extended its temporary layoff period to120 days from 60 days. But Ontario is going about the extension differently, turning temporary layoffs to leaves of absence.

“It could well result in an opposite effect to what was intended,” he said.

Originally, workers could be temporarily laid off as long as such a provision was in their contract, or they agreed to it, Monkhouse explained.

Otherwise, the layoff would be considered a constructive dismissal and would result in severance pay or a lawsuit. However, employers could extend this leave to 35 weeks under certain conditions, such as if they continued providing benefits to the employee.

Pinkus said while the new amendment prevents employees from pursuing a constructive dismissal claim under the Employment Standards Act, it seems they can still file claims under common law. Pinkus said businesses may not be as protected financially as the government intends, since they are still vulnerable to these lawsuits.

Monkhouse agreed: “I think we will see more people starting up constructive dismissal claims under the common law.” Kwiecinski said she was pleased to see the government address constructive dismissal claims in the amendment, and while claims can still be made through civil court, she said it’s a more costly option she doesn’t think many will consider.

“Yes, the civil courts still remain an option, but having only one option versus two is a lot better,” she said.

Pinkus said the amendment appears rushed and not thought through, and he believes it will hurt employees in the short term and businesses in the medium- and longterms.

Richard Charney, global head of employment and labour at Norton Rose Fulbright, said he thinks the amendment isn’t clear on whether it prevents constructive dismissal suits in civil court. On one hand, the amendment does not specifically say it only applies to claims under the Employment Standards Act. On the other hand, the power to amend is for the purposes of the act, he said.

Charney said he doesn’t anticipate many of these lawsuits — at least not while employees can still access government income support.

“The pressure for employers to argue temporary layoffs will become more acute should government subsidies be withdrawn,” he said.

One benefit of Ontario’s amendment versus Alberta’s approach is that it’s not a onetime extension, but rather is tied to the state of emergency, which could be extended, he said.

“(The amendment will) die a natural death when the public emergency dies a natural death,” he said.

An estimated 2.2 million people in Ontario have been affected by the shutdown