On May 29th, 2020, the Ontario government released Ontario Regulation 228/20 which is made under the Employment Standards Act (“ESA”). The regulation is clearly aimed at providing additional protections for employers relating to coronavirus layoffs and wage reductions as Ontario begins to restart the economy. However, due to rather poor drafting there appear to be glaring loopholes for employees to pursue their claims in the civil courts.
The Regulation appears to be drafted to be a catch all. It places all nonunionized employees who have had their hours / wages reduced on infective disease emergency leave and then restricts its application in specific situations.
A nonunionized employee is not to be considered on infective disease emergency leave if prior to May 29th, 2020:
These are the main exceptions to whom this regulation does not likely apply.
The regulation is to put it mildly was poorly drafted. The regulation places most nonunionized employees on infective disease emergency leave that have been laid off or had their hours reduced. We now have a situation where employees can be effectively working 90% of their regular hours but now appear to be on infective disease emergency leave.
The Regulation then goes even further and says a reduction in hours and wages shall not be considered a layoff. Additionally, it states that a reduction in hours and wages does not constitute a constructive dismissal.
This will likely create a great deal of confusion among employers and employees as this Regulation relates to statutory minimum rights. It does not appear to override common law which typically entitles an employee to significantly more rights.
For more information on common law layoff rights you can read my “Ontario Layoffs Guide.”
Complaints filed with the Ministry of Labour in relation to a temporary reduction or elimination of an employee’s hours or wages due to coronavirus that would otherwise constitute termination are deemed not to have been filed.
Per Section 8 of O.Reg. 228/20 INFECTIOUS DISEASE EMERGENCY LEAVE
There are numerous exceptions such as where the employee has been dismissed, laid off over 35 weeks in a 52-week period, a permanent discontinuance of business occurs, a constructive dismissal occurs etc.
This will have a significant affect on lower-income workers who do not have the financial means to bring a civil action. Many lower income workers rely on the Ministry of Labour to obtain their minimum statutory entitlements. They do this simply because they cannot afford to hire a lawyer and pursue a civil action despite often being entitled to 10’s of thousands of dollars more.
Under common law there is no implied legal right to layoff an employee. An employee can usually treat a layoff as a constructive dismissal and seek a full severance package / common law notice period. This was made clear by the Ontario Court of Appeal 2011 decision of Elsegood v. Cambridge Spring Service (2001) Ltd., 2011 ONCA 831 (CanLII). Subsequent case law has followed affirming the decision in Elsegood. Additionally, most reductions in hours / wages constitute constructive dismissal as well.
Lawyers for employers are certainly going to rely on the new regulation to argue that layoffs, reduction in wages and reductions in income in relation to coronavirus do not constitute constructive dismissal. They will likely argue that it is clear the government enacted this regulation to assist businesses in reopening. Additionally, they may argue the government has considered that an enormous amount of businesses will go bankrupt if Judges do not follow Ontario Regulation 228/20.
Lawyers for employees will continue to rely on previous case law which has stated that reductions in wages, hours and layoffs are all grounds for constructive dismissal. Additionally, lawyers for employees can argue that the ESA even accepts that civil proceedings are not bound to it in section 8(1) which reads as follows:
“Subject to section 97, no civil remedy of an employee against his or her employer is affected by this Act”.
There is going to be fierce debate amongst lawyers and judges alike as to how to interpret and apply the new regulation in Civil Courts. More litigious employee side lawyers may suggest it changes nothing and that common law still prevails. They can argue that the ESA and this regulation simply represent an employee’s minimum rights and the common law provides them their full set of rights.
On the other side you will have employer side lawyers who believe they now have the perfect defence to specific types of constructive dismissal claims stemming from coronavirus.
Until we have a few Judicial decisions Employment Lawyers can only provide educated guesses as to how the new regulation will be treated at common law.
It is debatable whether the new legislation will prevent some types of constructive dismissal claims. However, the new regulation does not mention breach of contract claims.
In most employment situations an employee will sign an employment agreement providing them numerous rights such as salary, benefits, bonuses, vacation pay etc. When an employee’s hours and correspondingly their wages are reduced then it would seem a breach of contract has occurred.
Many employers are inevitably going to be misinformed and will follow O. Reg 228/20 as though it is the law. This will likely lead to a flood of breach of contract and constructive dismissal claims being brought in civil courts. It is important to recognize that up until now the ESA only represented the minimum legal entitlements of employees.
The Ministry of Labour by closing its doors on several types of constructive dismissal claims will likely lead to a significant influx of cases being brought in civil courts. This is because many individuals who are turned down by the Ministry of Labour will contact employment lawyers and proceed with their claim in civil court.
Employment law is extremely confusing for employees to navigate in the best of times. Now they must navigate a poorly written confusing regulation and do so without the help of the Ministry of Labour in many cases. This will likely lead to many employees who do not seek the assistance of an Employment Lawyer signing away their entitlements for a fraction of their value.
Employers frequently will employ tactics to get an employee to sign away their rights. One common tactic is to use tight deadlines on signing a termination / severance package. Some even go as far as utilizing different deadlines and the earlier you sign, the more money you receive. Now that these individuals will often be turned away by the Ministry of Labour and be under intense financial stress, they are likely more susceptible to giving up.
At this point based on common law there has been a historically large amount of breach of contract, constructive dismissal and wrongful dismissal occurring due to layoffs, reduction in wages, reduction in hours etc. This new regulation will likely be seen by many employers as being a free pass.
While we do not know how the common law will respond to constructive dismissal claims stemming from coronavirus, we do know that a large amount of breach of contract claims are inevitable.
Additionally, many disputes which would have been brought by the Ministry of Labour and cost next to nothing will now be brought in civil courts. These claims will not only usually lead to higher pay outs but will almost certainly lead to a significant increase in legal costs for employers as opposed to claims brought before the Ministry of Labour.
If you are going to dismiss an employee contact an Employment Lawyer. You will want to have an employment lawyer discuss with you a strategy aimed at increasing the probability an individual signs away their rights. Additionally, given the potential for claims going forward you are going to want a release drafted. Your exposure to a lawsuit is already going to be high if you have laid off and / or reduced employees wages. Do not increase that risk by trying to take half measures or a do it yourself approach.
Most employees who have only had a temporary small decrease in income will not find it worthwhile to pursue a legal action. However, some employees who have had significant reductions in wages may wish to consider seeking their lost wages and / or pursuing a claim for constructive dismissal in the civil courts.
Employees who consider pursuing a constructive dismissal claim will ultimately need to consider their job prospects in the current business climate. One factor that should come into play is simply how much notice is the individual entitled to. An older manager who has been with a company for north of 10 years may be entitled to a year of pay. For them, a constructive dismissal claim is likely far more appealing than to a 20-year-old cashier at a fast food restaurant who may only be entitled to 1-2 months notice.
Whether you are an employee or employer McMackin Law is here to assist you with layoffs, dismissals, employment law advice etc.
