Ontario extends COVID-19 layoff provision, jeopardizing employers

TORONTO, Sep 4, 2020 – The Ontario government has extended a temporary layoff provision designed to protect employers from minimum severance payments during COVID-19, a decision that may actually force thousands of workers to pursue full severance pay and further complicate companies’ operations during the pandemic, says employment lawyer Lior Samfiru.

Through a regulation in the Employment Standards Act introduced earlier this summer, employers have been able to reduce employees’ pay or hours of work, or place them on a temporary layoff, without the change being considered a constructive dismissal or permanent layoff under provincial law, and subject to minimum severance pay (employees can still pursue constructive dismissal, and severance pay, under common law). Employees were instead considered to be on a job-protected Infectious Disease Emergency Leave. This protection was set to expire today. The provincial government’s announcement further extends this protection until January 2, 2021.

Once the layoff provision expires, employers will have the option of placing their employees on an actual temporary layoff, for a period of up to 35 weeks. Many workers could therefore find themselves on temporary layoff until September 2021.

“With this extension, the government is forcing employees on drastically reduced or no employment income to pursue terminations under common law, rather than go a full year without compensation of any kind,” said Samfiru, partner at Samfiru Tumarkin LLP.

Under common law, employees who have seen their pay cut or placed on a layoff can treat their job as being terminated, and pursue a severance package of up to 24 months’ pay with help from an employment lawyer.

“Our firm has spoken with hundreds of employees that were willing to wait until September 4 to see if their employer would call them back to work. Many of these individuals will not be willing to wait until January.”

“The government is actually creating the very problem it was trying to avoid. Businesses will find themselves at risk of paying out more in common law severance packages than they would have under minimum provincial rules.”