COVID-19 for Employers: Layoffs, Terminations & Workforce Reductions

As the world comes to grips with the impact of COVID-19, the uncertainty of the pandemic is having a direct impact on the economic situation of individuals and businesses. In Ontario, many employees are being laid off temporarily and as a result large and small businesses are finding it increasingly difficult to stay afloat.

As the effects of COVID-19 continues to escalate in real-time, the legal ramifications of each will lead to a myriad of new issues if the correct options are not considered by employers.  In Ontario, the Employment Standards Act (Act) is the governing legislation dealing with temporary layoffs.

The Act specifically defines a temporary layoff as,

  1. a lay-off of not more than 13 weeks in any period of 20 consecutive weeks; or
  2. a lay-off of more than 13 weeks in any period of 20 consecutive weeks, if the layoff is less than 35 weeks in any period of 52 weeks and the employer provides assistance as defined under the act. A continuation of payment to benefits or a retirement or pension plan amounts to such.

The Act, however, does not provide an employer with the absolute right to a temporary layoff an employee. An employer can temporarily layoff an employee where an employment agreement explicitly permits so or the employee consents to the employer’s request.  It is important to note that the Act is clear that a temporary lay-off beyond the statutory layoff period may be deemed a termination and subject to a claim for severance.

As COVID- 19 continues to evolve, the Ontario government is taking proactive measures to address the health and safety of Ontario workers and workplaces. As of the date of this article, the Ontario government has passed the Employment Standards Amendment Act (Infectious Disease Emergencies), which provides job protection for employees unable to work for certain reasons relating to the pandemic.

The issue of temporary lay-off remains a grey zone and may be subject to change as the economic situation continues to worsen. Employers, therefore, should be careful before they decide to temporary lay-off employee(s).   The lawyers at Chand Snider LLP can assist you to ensure that your business’s legal rights are protected and in compliance with the Act.

Chand Snider LLP is a boutique law firm in Ontario with extensive history assisting small and large businesses with their employment-related inquiries. With offices in both the financial district in Toronto and Ottawa, Chand Snider LLP is committed to serving our clients throughout Ontario during these uncertain times.

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