“Deemed” Termination After 13 Weeks (Temporary Layoff)…Not So Fast!

Finally, some good news for employers.

In the face of COVID-19, employers across the province have utilized temporary layoff in effort to meet the financial challenges associated with business closure or disruption directly related to the pandemic. 

However, the Employment Standards Act provides strict limits on the duration of the temporary layoff. Generally speaking, the layoff is restricted to 13 weeks or 35 weeks in special circumstances (i.e. the extension of employee benefits through the layoff period). In the absence of any recall to active employment within the prescribed period, the employment relationship is “deemed” terminated and the employee is entitled to termination pay and/or severance (under the Employment Standards Act, contract or the common law). 

Understanding that temporary layoffs were imposed en masse in mid-March, employers have been anxiously sitting on potential severance liability. For those employees under a 13 week layoff, they would be “deemed” terminated and in a position to demand severance in early June, 2020.

We have now learned that the Province of Ontario, thorough the Minister of Labour, Training & Skills Development, intends to announce proposed changes to the Employment Standards Act before the end of the week to extend the temporary layoff period. 

The declared state of emergency under the Emergency Management and Civil Protection Act is in place through to June 9th, 2020. The proposed amendment to the Employment Standards Act is expected to extend the duration of a temporary layoff for a period of 19 weeks after the state of emergency is lifted (June 9th, 2020 or later). That extension would apply to any layoff imposed after March 1st, 2020.

Details (in the form of regulations or legislative change) have not yet been tabled. However, the changes, as proposed, should provide employers with significant relief and limit the risk of severance liability. 

Our Employment Law Group will continue to monitor these and other important employment and labour law matters. Additional details to follow.

Disclaimer: Information made available in this article is provided for general information purposes only and is provided without representation for its accuracy or completeness. It is not legal advice and should not be relied upon. You should not take any action or fail to take any action based on the information set out in this article or on this website.  Consult a lawyer at Sullivan Mahoney LLP and seek professional legal advice tailored to your unique situation.