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Ontario Government Quietly Intervenes (Again) to Prevent Constructive Dismissal of Workers

3 minute read

On September 3, 2020, the Ontario government announced that it was extending the COVID-19 period under O. Reg. 228/20 (“the regulation”). In May 2020, the regulation amended the Employment Standards Act, 2000 (“ESA”), and allowed employers (in certain circumstances) to reduce employee wages and hours due to COVID-19 without triggering a constructive dismissal under the ESA. In effect, this was achieved by deeming these employees to be on a leave of absence under the ESA, rather than a temporary layoff which would not have been able to last indefinitely. While this regulation provided some security for employers, this “COVID-19 period” as it was named under the regulation, was set to end on September 4, 2020. In other words, if an employee had not been reinstated to their positon and paid their regular salary by September 4th, it may have triggered a constructive dismissal under the ESA.

However, without much fanfare, the Ontario government very quietly announced on September 3, 2020, that it was extending this COVID-19 period to January 2, 2021. So, subject to some important exceptions, employers can continue to reduce the hours and pay of their employees without triggering a constructive dismissal, under the ESA, until New Year. This may come as welcome news to many employers.

Notwithstanding these government actions, it may not be entirely good news or easy for employers as the regulation does not expressly give an employer the right to reduce hours and wages without triggering a constructive dismissal under the common law. The regulation only speaks to a constructive dismissal under the ESA.  As a result, there is some question as to whether or not the regulation has changed the common law right to reasonable notice if an employer has constructively dismissed an employee. In other words, while an employee may not be able to claim a constructive dismissal under the ESA, they might be able to claim a constructive dismissal under the common law and to collect their reasonable notice if they were to commence a court proceeding.

To date, we are not aware of any court case that confirms whether a claim based in the common law may be successful; however, it would appear to be consistent with section 8 of the ESA which states: “…no civil remedy of an employee against his or her employer is affected by this Act”. It is widely believed that this provision preserves an employee’s common law rights, notwithstanding the rights of the employer under the ESA to reduce hours and wages because of COVID-19. So, while employers may be happy about the government’s announcement to extend the COVID-19 period under the regulation, they should continue to be very careful due to the risk of claims based in the common law. While an employee may not have a right to claim any ESA entitlements, they may be able to claim for their reasonable notice under the common law.

At Lerners LLP, we are equipped to advise employers and employees about these very important changes to Ontario employment law. Our lawyers would be happy to assist you.

George A. Hamzo

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