Government of Ontario announces extension to protection against termination and severance liabilities

September 4, 2020

I advised you in early August that the Government’s response to the COVID-19 pandemic and the declaration of a state of emergency had required a number of amendments to the Employment Standards Act (2000) that had an impact on temporary layoffs of your employees.

Specifically, I advised you that “Employees who continue to experience reduced hours or wages after September 4, 2020, could attempt to claim that their employment has been terminated and assert various claims for compensation.”

I also encouraged you to examine your operational needs and, if able, take steps to recall workers back to work or adjust current salary reductions before September 4, 2020.  

Yesterday, September 3, the government extended employer protection against automatically triggered severance liabilities under the Employment Standards Act until January 2, 2021.

In practical terms, this means that any employees placed on temporary leave due to reduced demand because of COVID-19 can remain on temporary leave without penalty under the Employment Standards Act until such time as your workload requires their return, or until January 2, 2021.

Please note that while the protection from termination under the Employment Standards Act  has been extended the issue of whether a temporary layoff under common-law amounts to a termination has still to be determined by the courts. I will keep you updated on this issue.

Employees at businesses that have fully reopened continue to have job protection through the Infectious Disease Emergency Leave if they need to stay home to isolate or quarantine or take care of a loved one due to COVID-19. This includes parents who decide not to send their children back to school due to concerns about COVID-19.

News Release

September 3, 2020

Ontario Extends Support for Employers and Employees Impacted by COVID-19

Protecting jobs by helping businesses avoid costly payouts and closures

TORONTO – The Ontario government is helping protect jobs and businesses by extending protection to prevent temporary layoffs from automatically becoming permanent job losses. Although Ontario is now in Phase 3 of reopening, this extension will give businesses more time to reopen and return to full operations.

This extension will last until January 2, 2021. 

Under Ontario labour laws, termination of an employee after 13 weeks of being temporarily laid off triggers costly payouts which, for many businesses, could be the difference between survival and closure. This regulatory amendment delays these terminations and severance liabilities.

“As our government continues to take the necessary steps to safely reopen the economy, we need to protect the businesses and employees impacted by COVID-19.,” said Monte McNaughton, Minister of Labour, Training and Skills Development. “The cost of termination and severance pay can make it impossible for a business to survive and reopen. That’s why we acted to make sure businesses survive and workers have jobs to come back to.”

QUICK FACTS

  • Termination and severance obligations can create a significant financial burden for business. For example, a restaurant with 30 employees could be liable for termination payments as high as $100,000.
  • This measure does not apply to employees represented by a trade union. The government encourages parties in collective bargaining relationships to work together to resolve workplace issues.
  • Ontario’s unemployment rate in July was 11.3%.
  • Employees at businesses that have fully reopened continue to have job protection through the Infectious Disease Emergency Leave if they need to stay home to isolate or quarantine or take care of a loved one due to COVID-19. This includes parents who decide not to send their children back to school due to concerns about COVID-19.
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