This advisory note has been developed to assist our Ontario clients with some of the continuing employment legal issues they may face in light of the COVID-19 virus. This is not intended as a substitute for legal advice, but a supplement to it. Each employer will need to make its own decisions regarding such things as: (i) the constantly changing advisories from government and public health agencies in Canada; (ii) the nature of the employer’s business; and (iii) the employer’s financial health. If you have any questions, please reach out to one of the members of the Dentons Canada Employment and Labour group in Ontario.

Potential options for Ontario employers, in no particular order

Canada Emergency Response Benefit (CERB)

The CERB will provide workers who lose their income as a result of the COVID-19 pandemic with a $2,000 payment every four weeks for a period of up to 16 weeks. The benefit will be available retroactively from March 15, 2020, until October 3, 2020. The CERB will be available to workers in Canada who:

1. must stop working due to COVID-19, and do not have access to a paid leave or other income support;
2. are quarantined, sick or taking care of someone who is sick with COVID-19;
3. are working parents who must stay home without pay to care for children who are sick or need additional care because of school and daycare closures;
4. still have their employment but are not being paid because there is currently not sufficient work and their employer has asked them not to come to work; or
5. are wage-earners and self-employed individuals, including contract workers, who would not otherwise be eligible for Employment Insurance (EI

A worker will be eligible for the CERB if they ceased working for reasons related to COVID-19 for at least 14 consecutive days within the four-week period in respect of which they apply, and if during that 14-day period they were not in receipt of income from employment or self-employment, EI benefits, or allowances, money or other benefits paid to workers under a provincial plan due to pregnancy or parental leave. A worker is not eligible for the CERB if they quit their employment voluntarily. For more information about the CERB, please see our article specific to that benefit.

Short leave of absence (sick leave / quarantine leave):

Employees who are ill may be entitled to up to 15 weeks of EI sickness benefits. A medical certificate is usually required. However, as of March 13, 2020, employees who take such a leave or are under quarantine will be entitled to EI sickness benefits for a 14-day period, effective immediately, and without the usual seven-day waiting period, and without the need for a medical note. If the employee becomes ill while under quarantine or continues to be ill (in either case requiring a longer leave period), the EI benefit will only be continued once a medical certificate has been provided. 

Workplace restructuring:

Employers may consider undertaking temporary layoffs, work-sharing, pay cuts, reduced working hours and/or staggered work hours. 

All of these options would likely constitute a fundamental change to the terms of employment of employees, and could therefore constitute a constructive dismissal. The question that employers need to consider is whether it is better to risk a constructive dismissal and save jobs, or undergo employee dismissals if finances do not permit continued employment by all employees. Each employer needs to make its own decision with respect to risk tolerance regarding potential constructive dismissal claims; however, it is possible that, due to the current circumstances, employees will choose not to litigate, having appreciated that most employers had no choice but to undertake these measures in order to preserve the business. Pay cuts, reduced working hours and/or staggered work hours are an operational consideration for each employer, with no legal repercussions other than the possibility of constructive dismissal claims. Temporary layoffs and work-sharing need to be undertaken properly, if at all, and are addressed in more detail below.

Temporary layoffs:

In Ontario, employers can temporarily lay off employees for up to 13 weeks in any period of 20 consecutive weeks (with no obligations to continue benefits), or up to 35 weeks in any period of 52 consecutive weeks (with the obligation to continue payments for the benefit of the employee under a legitimate retirement or pension plan, or a legitimate group or employee insurance plan).

The benefit of temporary layoffs is that even though there is a risk of constructive dismissal claims, temporary layoffs preserve jobs and permit employees to collect EI coverage for the duration of the layoff. In addition, Working on Claim (which is discussed below), becomes an option in the event of a temporary layoff

It should be noted that even if a temporary layoff constitutes a constructive dismissal, if the employer is able to show that the employee would have returned to work in a few short weeks when the public health emergency ended, had the employee not left and claimed constructive dismissal, then the employer will have an argument that the employee should have stayed with the employer in order to mitigate. In such a case, the employee may only be entitled to notice during the period of the public health emergency temporary layoff. In addition, EI coverage and any other earnings during the temporary layoff can be set-off against any damages awards.

Temporary layoffs must be undertaken in writing. As well, the employee must be recalled to work prior to the end of the 13- or 35-week period, as applicable, failing which the employee will be deemed to have been terminated. It is generally safest for the employer (and best for the employees) if the employer continues the employees’ benefits coverage during the layoff period, thereby giving the employer greater flexibility over when the layoff will end. Dentons Canada’s Employment and Labour lawyers can assist with providing temporary layoff letters and additional advice.

Employment Insurance top-ups:

Employers that have registered a Supplementary Unemployment Benefit (SUB) plan with Service Canada may top up EI coverage while an employee is on sick leave. If a SUB plan has not been registered with Service Canada, EI top-ups are currently permitted only for employees on Pregnancy Leave, Parental Leave, Family Medical Leave and Critical Illness Leave. Unfortunately, for employers that provide a top-up to EI coverage for a non-approved leave, or where there is no SUB plan in place, the government will claw back payments from the employee.

For employers that wish to apply for the registration of a SUB plan now, the registration date of a SUB plan is the date it is submitted to Service Canada, as long as the application is complete. It appears that Service Canada is currently working hard to expedite SUB plan approvals in the COVID-19 environment. For further information on application requirements for a SUB plan, please see here.

Work-Sharing:

According to the federal government,

“Work-Sharing (WS) is an adjustment program designed to help employers and employees avoid layoffs when there is a temporary reduction in the normal level of business activity that is beyond the control of the employer. The measure provides income support to employees eligible for Employment Insurance benefits who work a temporarily reduced workweek while their employer recovers. Work-Sharing is a three-party agreement involving employers, employees and Service Canada. Employees on a Work-Sharing agreement must agree to a reduced schedule of work and to share the available work over a specified period of time.”

Due to the COVID-19 situation, the federal government has announced that the maximum duration of approved WS agreements can be extended from 38 weeks to 76 weeks.

For employers that do not have an approved WS agreement in place, applications must ordinarily be submitted to Service Canada a minimum of 30 days prior to the proposed start date. However, Service Canada has streamlined its processes such that employers are now requested to submit their applications 10 calendar days prior to the requested start date. Application information can be found here.

Short-term disability plans:

For employers that have short-term disability (STD) plans, the Canadian Life and Health Insurance Association (CLHIA) companies have indicated that employees who have been put in quarantine by a doctor or government authority may be able to receive short-term disability benefits under those plans. For plans that are insurer-funded rather than employer-funded, this may be of assistance to ill employees at no additional cost to employers. Employers are advised to review their STD plans and call their insurance providers for additional information.

Termination of employment:

In some cases, the only option for employers may be termination of employment. While that will presumably be a last option for employers, the benefit is that eligible employees will be entitled to apply for EI coverage. Employees can receive EI from 14 weeks up to a maximum of 45 weeks, depending on the unemployment rate in their region at the time of filing the claim, and the amount of insurable hours that the employee has accumulated in the last 52 weeks or since their last claim, whichever is shorter. The basic rate for calculating EI benefits is 55 percent of average insurable weekly earnings, up to a maximum amount of $573 per week.

Employers considering termination of employment for their employees should try to keep in mind, to the extent possible, whether employees have worked sufficient insurable hours prior to the termination, so as to be able to qualify for EI coverage.

Working on Claim:

Service Canada has an EI Working on Claim program, provided the person on benefits does not work a full week. Working on Claim requires the employee to declare their earnings online.  There are no employer requirements for Working on Claim. The program permits the employee to keep 50 cents of every dollar earned, up to 90 percent of their usual weekly pay.  If the employee goes over 90 percent, then EI benefits are deducted dollar for dollar. 

The following is a Working on Claim calculation example from the federal government:

John was laid off when the grocery store where he worked shut down. His weekly earnings at the grocery store were $500, so his weekly EI benefit rate is $275 (55 percent of $500). He has found a part-time job at a restaurant, where he works three days a week and earns $300 per week.  As a result, his $275 in EI benefits are reduced by $150 or 50 cents for every dollar he earns at the restaurant ($300 ÷ 2 = $150). This brings his total EI benefit to $125 ($275 – $150 = $125). In the end, John takes home $125 per week in EI benefits plus his part-time wages of $300, for a total of $425.

How to know which leaves to provide to employees

If an employer plans to put an employee on leave (as opposed to undertaking a termination of employment, WS, pay cuts, reduced working hours and/or staggered work hours), the following chart provides some guidance on how to proceed. Please keep in mind that operational requirements are equally important in making these decisions.

Leave	Descrption
Sick leave	To be used when an employee who is otherwise continuing to work, is sick or under quarantine for 14 days or less. No medical note needed. Sick leave provides EI benefits. The basic rate for calculating EI benefits is 55 percent of average insurable weekly earnings, up to a maximum amount of $573 per week.
Canada Emergency Response Benefits (CERB)	To be used when an employee is unable to work due to COVID-19 and is unable to earn an income from any other source. This includes employees who are sick, under quarantine, caring for someone who is sick, or who have to look after children who cannot attend daycare or school. Based on government announcements to date, this benefit appears to cover workers who are unable to work due to COVID-19 and who are not entitled to other EI Benefits (e.g., independent contractors; workers who do not have sufficient insurable hours). Working on Claim is not an option for these employees. The benefit will extend for up to 16 weeks and pays $2,000 per month.
Temporary Layoffs	Temporary layoffs can be used where there is insufficient work for an employee (either no work, or not enough work) due to COVID-19. Temporary layoffs are not intended to be used for employees who are sick, under quarantine or caring for others. Employees on temporary layoff are entitled to EI benefits for up to 13 or 35 weeks, depending upon whether or not benefits are continued. Employees on temporary layoff are also entitled to partake in the Working on Claim program in order to earn additional income.

For more information, please contact Catherine Coulter, Andy Pushalik or another member of Dentons’ Employment and Labour group in Ontario.