COVID-19: Legal questions regarding layoffs

Today we’ll address some of the questions that we’re receiving about lay-offs in Ontario during the pandemic. 

Most provinces (but not all) have temporary lay-off provisions. Those temporary lay-off provisions allow an employer, under the relevant employment statute (but not the common law) to lay-off employees for a designated period of time, without the lay-off constituting a constructive dismissal or termination in so far as that particular statute is concerned. In Ontario, the length of the temporary lay-off is not more than 13 weeks in any period of 20 consecutive weeks if no group benefits or substantial payments (and other less common items) are continued by the employer, and less than 35 weeks in any period of 52 consecutive weeks if group benefits or substantial payments (or the other less common items) are continued.

In Ontario, where the temporary lay-off is more than 13 weeks in any period of 20 consecutive weeks but less than 35 weeks in any period of 52 consecutive weeks, in lieu of the continuance of group benefits or substantial payments (as set out in the legislation), employers and employees can enter into an agreement about the time frame for the temporary lay-off. This has to be by mutual agreement and that agreement should be in writing and executed.

Once the lay-off time period exceeds the recall timelines as set out above, it will be deemed to be a termination by the employer, and the termination date goes back to the first day of the temporary layoff.

In a unionized situation, there can be an agreement between the employer and the union for a temporary lay-off time period that is longer than 35 weeks in any period of 52 consecutive weeks.

Many provinces have enacted legislation to extend their temporary lay-off time periods that are similar to the Ontario versions, albeit sometimes their time periods are shorter – even substantially shorter or not even in place at all. Ontario, to date, has not extended its temporary lay-off periods. If lay-offs in Ontario were instituted by employers in mid-March and the temporary layoff is to be less than 13 weeks, then by the middle of June, those layoffs will become terminations. Employers will be in the position of having to provide notice of termination (bringing back employees and having them work out their notice period) or termination pay in lieu of that notice of termination, along with any severance pay that is applicable to them under the provisions of the Employment Standards Act 2000. Of course, on any termination, there are also common law termination obligations that need to be considered.

We are currently looking into supporting proposals for the extension of the Ontario temporary lay-off periods, which will benefit both employers and employees.