Last week, the Ontario Government amended O.Reg. 228/20 to extend deemed infectious disease emergency leave (“IDEL”) under the Employment Standards Act, 2000 (the “ESA“) from January 2, 2021 to July 3, 2021.

This is a second update to our previous blog post on O.Reg. 228/20, Ontario Files New ESA Regulation Affecting COVID-19-Related Leaves, Temporary Layoffs & Constructive Dismissals, which changed the rules regarding employee eligibility for IDEL, temporary layoffs and constructive dismissals under the ESA. Under the regulation, non-union employees who were not performing their duties, working reduced hours, or receiving reduced wages (at the employer’s discretion) were deemed to be on IDEL for the duration of the COVID-19 period.

The regulation defined the “COVID-19 period” as beginning on March 1, 2020 and was last expected to expire on January 2, 2021. As a result of this new amendment, the COVID-19 period will now expire on July 3, 2021. This means that non-union employees who were not performing their duties, working reduced hours, or receiving reduced wages can remain on deemed IDEL until that time (unless they are recalled before then). Further, any future temporary reductions in hours or wages will not constitute a layoff or a constructive dismissal under the ESA. That is, until July 4, 2021, when the standard rules are expected to be re-engaged.

Concurrently, the Ontario government filed a new regulation under the ESA introducing temporary relief measures for the hospitality, tourism, convention, and trade show industries. Under O.Reg. 764/20, employers and unions in the enumerated industries can negotiate an alternative to putting termination and severance pay into trust for temporarily laid off employees. Where an employer and union agree to apply the new regulation:

  • The union will be able to elect to retain recall rights for some or all of the employees it represents, and the union’s election will be binding on the affected employees unless such employees had already elected to receive their termination and severance payment entitlements under the ESA;
  • Where the union has elected to retain recall rights on behalf of an employee, that employee will not be permitted to renounce the right to be recalled prior to a date agreed to by the employer and the union; and
  • Where the union has elected to retain recall rights on behalf of its members, the union will similarly not be permitted to renounce the right to be recalled on the employee’s behalf.

This arrangement is expected to provide financial relief that would allow employers to remain operational and ultimately preserve jobs. As with many of the measures introduced during the COVID-19 pandemic, the ability to delay termination and severance pay obligations under this regulation is temporary and expected to expire on December 17, 2021.

Key Takeaways

The noted amendments are welcome news for employers impacted by COVID-19. Employers now have increased flexibility and additional time to recover and implement measures to sustain operations going forward.

In the coming months, employers should think about whether they will be able to recall employees who are on a deemed IDEL. If employers cannot recall employees back to work or restore their hours and wages by July 4, 2021, the standard ESA rules are expected to apply. Employers would be able temporarily layoff employees who are currently on IDEL starting July 4, 2021, but should ensure they understand the implications of such measures, including the risk of deemed employment terminations and constructive dismissal claims.

Further, unionized employers in the hospitality, tourism, convention, and trade show industries should consider whether they could benefit from temporarily deferring termination and severance obligations for laid off employees. Employers should consult legal counsel to evaluate the risks before engaging in such discussions with unions.

Many thanks to Dorna Zaboli for her assistance in drafting this article.