Since March 2020, huge numbers of Ontarians have had their working lives turned upside down by the pandemic. Employers have sprung up, disappeared, and reorganized. Employees in the hardest-hit industries have changed careers or left the workforce. Many have held onto dormant employment relationships in the hope and expectation that they would be returned to work once things have improved.
As of July 30, 2022, the legal situation has changed for employees on COVID 19 layoff – while you were previously on a “leave of absence” you are now on temporary layoff. The law around temporary layoffs, therefore, just became a lot more relevant for a lot of Ontarians. This article discusses the legal position of Ontario employees who remain on temporary layoff following July 30, 2022.
How has Ontario been addressing COVID 19 layoffs and how does that impact employment rights?
Since March 1, 2020, employees who have had their work hours reduced or eliminated owing to COVID 19 are legally deemed to be on unpaid “Infectious Disease Emergency Leave” (or “Deemed IDEL”, for short). Early in the pandemic, the Ontario government observed that huge numbers of employees were being put out of work owing to pandemic-related restrictions and advisories. The government responded to this by making a new rule: all employees in this situation had not been “laid off”, they are actually on a leave of absence, and have been on that leave of absence the whole time. Not a medical leave, parental leave, or any other kind of recognized leave, but a brand-new leave of absence called Deemed IDEL, Unlike any other leave of absence, employers could force employees to take Deemed IDEL. Deemed IDEL, is, in effect, a temporary layoff caused by COVID 19.
Why did the government do it this way?
Legally, the concept of a temporary layoff is sticky, and comes with a wide range of employment rights and obligations. Most significantly, under normal circumstances, most of the employees temporarily laid off due to COVID 19 would have been entitled to termination pay and severance. By introducing the concept of Deemed IDEL, the government held back a tidal wave of employee claims for termination pay and severance.
Did Deemed IDEL apply to all employees in Ontario?
No. Deemed IDEL does not apply to employees working in federally-regulated industries like transportation, telecommunications, and banking. Employees in those industries are subject to the Canada Labour Code, a totally different set of employment standards rules.
Did Deemed IDEL work as intended?
Deemed IDEL certainly saved employers money but has caused a lot of confusion and financial strain for employees. The Ontario Government never clarified whether Deemed IDEL removed employees’ right to sue in court for temporary layoffs, and this notoriously led the Ontario Superior Court of Justice to issue multiple apparently conflicting decisions on this issue. Furthermore, while employees on Deemed IDEL were originally entitled to CERB, and later EI, much of this financial support ended in December 2021, leaving many employees in a financial lurch.
Our employment lawyers explain: what has changed now?
As of July 30, 2022, the floodgates have been thrown back open, and Deemed IDEL has ended. This means that you could be on Deemed IDEL one day and on temporary layoff the next. You likely would not have received a notice from your employer of this change; this happened automatically.
What does the Employment Standards Act say about temporary layoffs?
After a certain amount of time has passed on temporary layoff, you are automatically entitled to termination pay and severance under the Employment Standards Act (the “ESA”). Specifically, that entitlement accrues after 13 weeks or 35 weeks, depending on (for instance) whether you still have benefit coverage.
What does the common law say about temporary layoffs?
The common law is the law of the courts, which is developed and enforced through decisions of judges. Courts are much less forgiving to employers on the topic of temporary layoffs. Courts start from the assumption that your employer has no right to temporarily lay you off, unless your employer can show some agreement or practice permitting it. If the court is not satisfied with your employer’s explanation, a temporary layoff is considered a fundamental breach of your employment rights, which gives you the right to sue your employer for something called “constructive dismissal.”
As mentioned above, neither the government nor the courts ever clearly explained whether Deemed IDEL had any effect on the laws of the courts. However, as of July 30, 2022, that uncertainty is gone. You may have a claim for constructive dismissal as of the moment Deemed IDEL ended.
How do you claim constructive dismissal?
In order to claim constructive dismissal, you must quit your job and bring legal proceedings against your employer.
How much money can I be entitled to in a constructive dismissal due to a temporary layoff?
If your employment is constructively dismissed, you are entitled to damages for wrongful dismissal. This is the same entitlement that your employer would have to pay you if they eliminated your position, for example. The amount of money you are entitled to typically falls somewhere in the range of 2 to 24 months of your pay, depending on factors like your age, length of service, character of employment, and chances of re-employment to a similar role.
Is it risky to claim constructive dismissal for a temporary layoff?
Yes. Make no mistake about it, constructive dismissal is the riskiest type of claim an employee can make. Because of this, you should never claim constructive dismissal except on the advice of a lawyer.
The first and most obvious risk is the requirement to quit in order to claim constructive dismissal. This means that if your claim is unsuccessful, you will not be able to return to your job.
The second risk is the “all or nothing” nature of constructive dismissal claims. If you quit and then claim constructive dismissal, you are either entitled to full wrongful dismissal damages (because you were, in fact, constructively dismissed), or nothing at all (because you quit). To add insult to injury, if you sue your employer and lose, you will have to pay some of your employer’s legal costs.
The third risk is that your employer may deflate your claim by inviting you back to work, in which case you may not have any good options but to say “yes”.
Our employment law firm answers: “what happens if I reject my employer’s return to work?”
If you claim constructive dismissal due to a temporary layoff, rejecting your employer’s invitation to return to work can significantly reduce the value of your claim. Specifically, the amount of money you can recover is likely “capped” by the amount of income you would have earned between the start of the temporary layoff, and the date you were invited to return to work. For instance, if you are temporarily laid off for only two weeks, a successful constructive dismissal claim would net you two weeks’ wages.
That seems unfair. Why would a court require me to return to work for my employer? What about my workplace rights?
This comes from your duty to mitigate your damages. To explain, if you sue your employer for terminating your employment, the judge will assess the amount of money your employer caused you to lose, called your “damages”. The judge will only award you damages for money you actually lost and could not have avoided losing. When you lose your job, your damages are your loss of employment income. If you replace that lost employment income by working another job (or if you could have replaced it), the judge will reduce your damages to reflect your actual financial loss. The idea is that you are at least partially responsible for making yourself whole.
In most cases, your duty to mitigate your damages will require you to accept an offer of re-employment from the same employer who temporarily laid you off. In other words, you are responsible for income that you lost by rejecting re-employment.
Is my employer “bluffing” when they invite me to return to work? They can’t want me back on an employment contract after this.
Maybe. Because there is such a big incentive for your employer to invite you back to work, they may do so even in circumstances where they want nothing to do with you. This happens quite frequently in these types of cases. If you call your employer’s bluff, you may end up back in an employment situation that neither of you really want. That is one way the law incentivizes employers and employees to continue employment relationships.
An employment law answers: how can I reduce these risks?
The easiest way to reduce these risks is to wait. You have two years from the start of your temporary layoff to sue for constructive dismissal, and you do not have to quit and make your claim for constructive dismissal right away. By the time your employer becomes aware of your claim, it might be too late for them to deflate your case by inviting you back to work.
Waiting has a second benefit, which is that you will know exactly how much money you have lost from your termination, and you won’t have to guess whether you’ll be able to get a replacement job. Deciding whether or not to sue can be a difficult decision early on – the decision may become clearer as time passes.
Waiting, however, can also come with its own risks. By waiting, you could be unintentionally representing that you have condoned (agreed to) the layoff, which could complicate your constructive dismissal claim. You also cannot wait forever, as lawsuits in Ontario must generally be started within 2 years of the subject matter of the claim.
I need legal advice. What should I do if I am still on COVID 19 Layoff?
While you should not get any legal advice from a blog, we can say that while you very likely can claim constructive dismissal against your employer, there is no single or obvious answer to this question. If you are in this position, speak to an employment lawyer. Call us today - Share Lawyers offers free employment law consultations with no obligations.
If you are having an employment issue such as wrongful dismissal, unfair severance, or workplace harassment, but you’re not ready to take to anyone yet, please see the Employment Law page on our website, created by our experienced employment lawyers.
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