The Ontario government has extended the COVID-19-related temporary layoff regulation to January 2, 2021 with the exception of those in federally regulated industries.

The regulation permits an employer to temporarily lay off an employee, or temporarily reduce their hours and/or pay, without it being deemed constructive dismissal. Constructive dismissal is the term for when an employer, without outright terminating a worker, changes the job so fundamentally that the Court treats it as though the worker has been dismissed. Examples include a substantial reduction in wages or hours, demotion to a much more junior position, and a poisoned work environment. The employer’s obligations to provide notice of termination and related compensation are the same in a constructive dismissal as they would be in an outright dismissal.

The layoff or reduction must be for reasons related to COVID-19 – if the business was contemplating layoffs prior to March of 2020 because of a previous downturn in sales, for example, the ordinary rules apply. The layoff must also take place between March 1, 2020 and January 2, 2021. The employee is deemed to be on a job-protected leave, so at the end of the layoff the employer must return them to the same position or one that is substantially the same.

Unless the regulation is extended again, then as of January 3, 2021 the ordinary rules will apply:

  • The right to impose a temporary layoff must be included in the employment contract, failing which a temporary layoff may constitute constructive dismissal;
  • A temporary layoff must abide by the maximum time limits set out in the Employment Standards Act: 13 out of 20 consecutive weeks (or 35 out of 52 consecutive weeks if the employer fulfills one of several conditions which include paying for benefits during the layoff); and
  • A significant reduction in hours or wages constitutes constructive dismissal.

The layoff clock will reset as of January 3, 2021, so an employee already on layoff as of that date may be placed on a further temporary layoff as long as it is within the Employment Standards Act limits described above (and as long as the right to lay off is included in a binding employment contract).

You can find more information on this regulation by visiting the Government of Ontario website.

Please do not hesitate to contact me for more information on topics covered in this post.

Josephine A. McCready

Associate – Civil Litigation, Employment and Construction Law Groups

Disclaimer: This article is provided as an information resource. This article should not be relied upon to make decisions and is not intended to replace advice from a qualified legal professional. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship. Please note that this information is current only to the date of posting. The law is constantly changing and always evolving.


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