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Terminations & COVID-19: What Employers and Employees Need to Know

Written by on March 31, 2020 in Covid-19 Centre, Employment Law Blog, Employment Law Issues

The Ontario economy is in a state of turmoil. Between rail blockades by protesters, and interruptions to travel and the supply chain caused by the coronavirus, many businesses are feeling the impact. And as a result of all this uncertainty, terminations are happening.

If you are an employer who is in the unenviable position of having to fire someone, it is important that you know your responsibilities under the law. Also, if you are an employee who is in the unfortunate position of being let go, it is important that you know your rights. In this article, we will give a brief overview about what both employees and employers need to know about terminations in Ontario, especially during these unprecedented times that we are in.

Reasonable notice or pay in lieu of notice

According to the Employment Standards Act, 2000 (ESA), in most cases, an employee is entitled to written notice of termination or pay in lieu of written notice if they have been working for at least three months and they are fired without cause (i.e. they are not being fired because of something egregious that they did or didn’t do). An employee is also entitled to severance pay if the employee has worked for a company for at least 5 years and their payroll is at least $2.5 million or at least 50 employees are being terminated within a 6 month period because all or part of the business permanently closed.

Currently under the ESA, written notice of termination or pay in lieu of notice is generally considered to be a minimum of one week for every completed year that the employee has worked with the company, up to a maximum of eight weeks. Exceptions are employees who have worked for at least 3 months but less than 1 year that would be entitled to 1 week; employees who have worked for 1 year but less than 3 years – 2 weeks. Employees who are entitled to severance pay receive 1 week for each completed year of service up to a maximum of 26 weeks.

It is important to know that an employee may be entitled to additional notice or pay in lieu of notice under the common law, which can be substantial in some cases. Common law notice is based on a number of factors in determining the length of notice. As the entitlement could vary greatly depending on such factors as the employee’s seniority, age, position, reemployment prospects etc., both sides should consult with an experienced employment lawyer in determining the appropriate common law notice period.

Not all employees however are entitled to notice of termination or termination pay. Exceptions include employees who are guilty of misconduct, hired for a specific length of time or until the completion of a specific task, construction employees, employees who are temporarily laid off, those who refuse a reasonable offer of alternate employment and employees who have lost their job due to the contract of employment being impossible to perform or frustrated by an unexpected or unforeseen event or circumstance. Employers are considering whether this latter exception applies to COVID-19. If unsure whether you or your employees are entitled to written notice of termination or pay in lieu, it would be wise to speak with an employment lawyer prior to making any decisions with respect to an end of an employment relationship.

When is termination illegal?

While employers are not required to give a reason for an employee’s termination, there are certain circumstances, when an employer cannot legally terminate an employee. This includes firing or penalizing an employee for asserting their rights under the Occupational Health and Safety Act (OHSA) such as refusing to work if the workplace is unsafe due to COVID-19, under the Human Rights Code (HRC) such as for terminating an employee who has an illness that is considered a disability under the HRC, and under the ESA such as refusing to work more than the maximum hours or for taking a leave of absence as outlined in the ESA.

Constructive dismissal

Constructive dismissal occurs when an employer makes major unfavourable changes to an employee’s work conditions such as lowering their wages, dramatically reducing hours, or making significant changes to their duties. If the employee resigns as a result and it is found that they have been constructively dismissed, the employer will be required to provide them with a severance package subject to the employee’s duty to mitigate by continuing to work for that employer. Given COVID-19, we will need to wait and see whether the Courts treat constructive dismissal cases any different than usual.

It is important to note however that minor changes to an employment contract will not trigger constructive dismissal, as employers do have the right to make reasonable changes. Before resigning and claiming constructive dismissal, employees should always seek the advice of an employment lawyer to determine whether they have a winnable case.

Temporary layoff

When terminations are done for economic reasons, such as COVID-19, many companies opt for temporary layoffs as they intend to bring their employees back when conditions improve. In order for a company to make temporary layoffs however, it must be agreed upon in writing in advance in the employment contract that this is allowable or implied in the contract of employment such as a seasonal worker. According to the ESA a temporary layoff is one that lasts:

  1. Not more than 13 weeks of layoff in any period of 20 consecutive weeks; or
  2. More than 13 weeks in any period of 20 consecutive weeks, but less than 35 weeks of layoff in any period of 52 weeks where certain conditions are met such as payments, benefit coverage and/or supplementary unemployment benefits are paid.

Employers are not required to set a specific recall date when they temporarily lay off employees, however a temporary layoff could result in a constructive dismissal claim if the layoff is not allowed by the employment contract. Despite not having grounds to do so, given COVID-19, many employers have selected the temporary layoff option. As we are in unchartered waters, we do not know whether the legislation will be retroactively amended to make this exception for employers or whether the Courts will begin to favour this option although currently being contrary to law.

For more advice or information about your rights as an employee or your responsibilities as an employer when it comes to ending employment relationship, contact Minken Employment Lawyers today. Be sure to sign up and tell others about our e-newsletter for legislative developments and Court decisions impacting this issue!

Minken Employment Lawyers is your source for expert advice and advocacy on today’s employment law issues. Whether you are an employer or an employee, we can help. Contact us to see how.

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