Navigating COVID-19 layoffs, terminations, and reductions

September 26, 2020                    By: Jessica Pugliese, J.D.              Issue: 002

Whether you are an employer fighting to keep the lights on, or an employee struggling to make ends meet, the pandemic has not been kind. Despite the Ontario government’s attempts during the pandemic to keep us informed, keeping up to date with announcements and new regulations has not been easy. Today, we breakdown some of the measures put in place by the Ontario government during COVID-19 that impacts employer-employee relationships.  

In normal circumstances, employers have certain rules to follow when considering employee layoffs, terminations, and reductions in hours or salary. These rules are governed by legislation and individual employment contracts or agreements. In normal circumstances, some employers—depending on an employment agreement or industry standard— may temporarily layoff an employee for a period of up to 13 weeks, or 35 weeks if benefits are maintained. If the employee is not called back, the layoff will likely be treated as a termination. In some cases, even a reduction of hours or pay can be deemed a termination or a constructive dismissal.  

Normally an employee who is terminated without cause will have some entitlement to notice or pay in lieu. This notice is governed by the Employment Standards Act, 2000, as well as any termination provisions or lack thereof in an employment agreement. Many employees during COVID-19 found themselves in precarious situations with sudden layoffs or changes to hours and salary. Many employers were making very difficult staffing decisions in response to sudden decreases in business revenue and mandated business closures.

Both employees and employers were unsure about how changes to employment relationships were going to play out during and after the pandemic. However, in response to COVID-19 the Ontario government passed the following emergency measures that changed the landscape of employment law—temporarily:

·      Created a “COVID-19 Period” that ran from March 1, 2020 until six weeks after the order was terminated;

·      Mandated that COVID-19 related layoffs and changes to hours and salary were not to be treated as constructive dismissals; and

·      Extended temporary layoff timelines for employers for the duration of the “COVID-19 Period”.

These measures prevented employees that were temporarily laid off due to COVID-19 from making wrongful termination claims. On July 24, 2020, the provincial government revoked these measures. This meant that the six-week clock started ticking for employers who would seemingly have to call back employees before September 4, 2020 to avoid claims made against them. However, on the eve of the final day before the deadline, the government announced that it would be extending the permitted temporary layoff period again—this time until January 2, 2021.

As COVID-19 continues to complicate our employment relationships and continues to put strain on individuals and businesses, we predict difficult times for employees and employers alike.  Navigating this seemingly forever changing employment landscape is not an easy task. Contact our office for assistance with a variety of employment related matters.