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Introduction
Unifor represents 315,000 workers in workplaces across Canada. Our membership includes over 160,000 Ontario workers.
Tens of thousands of Unifor members have been laid off or placed on leave because of COVID-19. Our members in the hospitality and gaming, manufacturing, and road transport sectors in Ontario have been badly affected.
Unifor has worked with many employers to formulate appropriate responses to COVID-19. In many cases we have adapted our existing collective agreements with the goal of protecting jobs and preparing for a return to normal work.
Ontario rules about layoff and termination
No amendments to the sophisticated and flexible termination and severance pay rules in the Ontario Employment Standards Act appear to be necessary. These rules are well-known, stable and predictable. They have been established for many decades. Employers and employees in Ontario have now conducted themselves during the COVID-19 emergency for more than two months under this familiar regulatory scheme.
Unlike other Canadian jurisdictions that have seen a need to alter their rules to address COVID-19, the Ontario model is sophisticated and flexible enough to accommodate the extraordinary circumstances of the COVID-19 pandemic.
In most provinces, including Ontario, when collective agreements or individual employment contracts permit a temporary layoff, employment standards laws regulate the way in which the layoff must occur. In most cases, employers can lay off an employee without making any payments to the employee. Only if the layoff is permanent, or if it lasts longer than the defined length of a temporary layoff, is the employer exposed to a termination or severance pay expense.
In Ontario, the ordinary rule in section 56(2)(a) of the ESA is that a temporary lay-off can last up to 13 weeks out of any 20 consecutive weeks. An employee is considered to be on lay-off for a week if they earn less than half of what they usually earn in that week. After 13 weeks there is a deemed termination. If the layoff was without notice, the employee is then entitled to receive termination pay.
Ontario employers can extend the length of a temporary layoff, potentially at no cost or very modest cost, by doing any of the things listed in section 56(2)(b) of the ESA. This may include things like making payments to the employee from a Supplemental Unemployment Benefits Plan under the Employment Insurance Act, or continuing to pay for the employee’s pension or benefit insurance premiums, or other similar things. Some of these payments may be modest. As well, employees who are not represented by a union can agree to a longer period of temporary layoff.
This provides employers with a great deal of flexibility to extend the duration of a temporary layoff for up to 35 weeks in any period of 52 consecutive weeks. It also achieves the desirable policy goal of encouraging employers to maintain pension or health insurance plans, or SUB plans.
In the context of COVID-19, this also achieves the desirable goal of providing an incentive for employers to maintain employees’ attachment to their workplace in order that a quick economic recovery can occur.
For unionized employees whose collective agreements provide recall rights, decisions of Courts and arbitrators have established that the 35 week duration for a temporary layoff likely applies in all cases1.
If the employer is a large employer, the employee could also be entitled to severance pay after 35 weeks of temporary layoff.
Ontario’s ESA rules about layoff and termination are flexible enough to deal with COVID-19
This sophisticated and flexible scheme meets the needs of employers and employees during the COVID-19 emergency. Employers who were forced to lay off employees suddenly as a result of COVID-19 can avoid the financial consequences of the lay-off and termination rules in the ESA by recalling their employees before they have been laid off for 13 weeks out of 20 weeks. Programs like the Canada Emergency Wage Subsidy are available to assist some employers to do this until August 29, 2020. Employers may also do any of the things described in section 56(2)(b) of the ESA to extend the temporary layoff to 35 weeks.
Finally, some employers have addressed the closure or slowdown of workplaces by allowing employees to be absent on an infectious disease leave under the revised section 50.1. These employees are not laid off, and their weeks away from work do not lead to any termination pay or severance pay liability for the employer.
Comments about COVID-19 responses in other jurisdictions
Jurisdictions that have altered their employment standards rules about termination of employment in response to the COVID-19 pandemic did not previously have the flexibility and sophistication of the Ontario termination and severance scheme.
- In British Columbia, prior to May 4, 2020, the Employment Standards Act did not permit a longer temporary layoff beyond 13 weeks out of 20 weeks. An amendment to a regulation now extends the possible duration of a temporary layoff to 16 weeks if the reason for the layoff is COVID-19.1
- In Alberta, the permitted duration of a temporary layoff has been extended from 60 days to 120 days for any layoffs that commenced after March 17, 2020.
- In Saskatchewan, COVID-19 amendments to a regulation mean that a notice of layoff or termination pay is now owed only where employees are laid off for more than 12 weeks in any 16-week period during a public emergency. Normally in that province, and unlike Ontario, a notice of even short layoffs is required.
- In Manitoba, the ordinary rule is that a temporary layoff is not deemed to be a termination until it exceeds 8 weeks in a period of 16 consecutive weeks. A COVID-19 amendment to a regulation means that any week of a COVID-19-related layoff is not counted toward the 8 weeks after which a temporary layoff becomes a termination (see s. 23(1.1) of Employment Standards Regulation).
None of these jurisdictions provides any useful guidance for Ontario, where employers already have an ability to temporarily lay off employees at no cost for up to 13 weeks, and can easily extend the duration of a temporary layoff from 13 weeks to 35 weeks in order to avoid a termination pay or severance pay expense.
Any measures to adapt the ESA to COVID-19 should be limited and focused If it is intended to lengthen the time before which a temporary layoff is deemed to be a termination for purposes of the ESA, Unifor would identify the following concerns.
The purpose of the requirement of notice in advance of a layoff or termination is to provide employees with an opportunity to take preparatory measures and seek alternative employment.
The requirement to pay termination pay where the required notice in advance is not given is intended to cushion employees against the adverse effects of economic dislocation which are likely to follow from the absence of an opportunity to search for alternative employment2. Any lengthening of the temporary layoff period detracts from this purpose.
Unifor is also concerned that employees who must wait for termination pay after a layoff bear the risk that an employer may become insolvent, with the result that the employee is unable to recover their termination pay at all. Making employees wait longer before getting termination pay will mean that many will not get it at all.
1 See for example CAWLocal 222 v. Johnson Controls, 2010 ONCA 131, affirming National Automobile, Aerospace, Transportation and General Workers Union of Canada (CAW – Canada, Local 222) v. Johnson Controls Inc., 2009 CanLII 10993 (ON SCDC), <http://canlii.ca/t/22rg4>, retrieved on 2020-05-21
2 Rizzo & Rizzo Shoes Ltd. (Re) [1998] 1 SCR 27 at para 25.
