What you need to know about employment law during COVID-19

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The COVID-19 pandemic brings uncertain times for many small business employers as well as employees—especially those who have been sent home or laid off indefinitely from their jobs. Here are four key points employees and small business owners should keep in mind:

Does my employer have the right to lay me off?

Employers do not have the right to lay off an employee unless the contract between the employer and the employee provides for it. There are two ways that this normally occurs: First, the written employment agreement contains this clause; second, there is an established history of employees being laid off during low-demand times for the business, and recalled when business picks back up again (such as in manufacturing). If an employee is laid off by an employer who does not have the right to lay off that employee, the employee may well be able to interpret the layoff as a constructive dismissal (termination of employment) and seek damages with the help of a lawyer. I will emphasize that this is a choice made by the employee. A layoff is not a termination of employment unless the employee triggers this. A layoff by nature is intended to be temporary. The idea is that the employee will not come in for a period of time but will be returning to work at some time in the future.

I’ve been laid off. What are my options?

This depends on your specific situation as well as how long you think it will be until things get back to normal. I suspect that a lot of employees who could choose to interpret their layoff as a constructive dismissal will choose to ride it out by claiming Employment Insurance (EI) benefits for a while, and then return to their job. The hope here is that this downturn last too long, so that when it’s all said and done, the difference between what you would have earned during the layoff and what you actually got from EI isn’t very much. If an employee is thinking about taking the layoff as a termination, my first suggestion is to not be wrong about whether this amounts to a termination, or that by walking away, you will simply be resigning from your employment. If a dismissal can be established, then it’s important to look at what sort of pay in lieu of notice an employee would be entitled to. Normally, we can estimate a notice period with a fair amount of certainty. However, this a bit of an unknown right now because we don’t know how long this pandemic/shutdown is going to last and how hiring will ramp back up once things resume afterwards. (You can find more general information on how to determine the length of a notice period and severance in one of my previous columns here). For those thinking about taking the leap and calling their layoff a termination, I would also add that although the case law to date is fairly accepting of the proposition that laying off an employee can amount to a termination if there isn’t any agreement allowing for the layoff, we have never seen a situation like this one with COVID-19. The case law on a layoff as a constructive dismissal is based on very different circumstances. The first few legal decisions on these pandemic layoff cases will need to deal with whether these unique circumstances alter this longstanding common law concept. I think it will be interesting to see if judges feel that the concept should be interpreted differently or modified given these unprecedented circumstances. With so many employees being laid off right now, even if only a small percentage choose to take the layoff as a dismissal, this would amount to thousands of cases that the courts will need to deal with in the coming months.

**I’m a business owner. Does the Employment Standards Act allow me to lay off employees?**

I’ve been asked this a lot recently. The answer is “yes and no.” Yes in that the Act does include language, at section 56, stating that an employer can lay off an employee—but no in that the Act doesn’t get you out of your common-law obligations, specifically the constructive dismissal concept mentioned above. This can be confusing, but it is important to understand that the Employment Standards Act does not give you the blanket right to lay off employees.

I’m a contractor and not an employee. How does employment law affect me?

If you are an independent contractor, this isn’t an employment law issue. Take a look at what your contract to provide services says about termination, and that is your answer. A word of caution: You might not actually be an independent contractor; instead, you might be a dependent contractor. A dependent contractor who no longer gets any hours of work from their “client” is in a situation that is very similar to an employee, in that the suspension of service without any authority to do so may well amount to a breach of the contract. There is the federal government’s Canada Emergency Response Benefit that is very similar to EI that you would apply to for payments while you are not working, though details are still being laid out. I’ll follow up with another column on this subject in the next few weeks, which will help clarify some of these issues when more details are known.

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About Scott Hawryliw

Scott Hawryliw practises civil litigation law as a partner at Stewart Esten LLP in Barrie, Ont., with an emphasis on wills and estates, employment law, real estate disputes and general commercial litigation.

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Comments Cancel reply

David Hem says:

April 2, 2020 at 5:16 pm

Your article is wrong, dead wrong.
Employers can layoff staff without consent, as per the Ontario Employment Standards Act 2000. Rules about recalling are listed. But you definitely can legally be laid off, regardless of your contract.

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1. MoneySense Staff says:
  
  April 3, 2020 at 9:34 am
  
  Thanks for letting us know. We will update this as soon as we can. Our goal is to have the most up-to-date information. We do our best to fact check all our content before it gets published and make updates regularly, but some things may get missed. We would like to remind our readers to do their own fact checking before making any personal finance decisions.
  
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Aryton Moss says:

April 5, 2020 at 9:50 pm

No, this article is not dead wrong. The ESA has language in there regarding minimal rights for workers in Ontario. Just because an employer can and does lay people off, it doesn’t give them the legal right to. This is where common law kicks in if and only if affected employee chooses to do so, primarily with the help of an employment lawyer.

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Megan Beaudin says:

May 20, 2020 at 2:43 pm

I was put on temporary and accepted it because my kids are out of school. But now an employee from another department is sitting at my desk doing my job. I’m home collecting EI. I was asked to come in and do some filing for 6 hours a week. Did I create a problem for myself by agreeing to all this?

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1. MoneySense Staff says:
  
  May 21, 2020 at 9:58 am
  
  Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.
  
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Mary Kelly says:

May 30, 2020 at 4:21 pm

Can an employee refuse to come back to work, if they are recalled after a covid layoff, if part of their position isn’t available? The example would be a restaurant server who used to serve tables and used to take phone orders. If the restaurant is only open for take out at this time, can they refuse the layoff if serving is not part of the role they will be doing at the moment?

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Mary Kelly says:

May 30, 2020 at 4:23 pm

sorry I meant refuse the recall.

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Rather B Anon says:

June 10, 2020 at 8:36 pm

My employer is asking some employees to work while receiving cerb/ei during the corona crisis with no compensation aside from cerb/ei. We have asked when we will get rehired but never get answers.

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Firdos Master says:

June 27, 2020 at 11:47 pm

Hello
I have join the restaurant as an employee. I have been working from
3 weeks . My employer suddenly told me not to come at work without any reason and notice . Is it fair ?? I didn’t even do anything and without any reason she just dismiss me over text. Is it fair ? Can i still apply for CERB.

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CP says:

October 16, 2021 at 2:52 am

I don’t know which way to turn. I have no investments, or a lot of money for that matter. I work as a “dependent contractor” as this article describes a dependent contractor to be. I worked for a company for close to 7 years without any kind of layoff at any time, even during down periods. I tried to form a small business, with the hopes of accumulating a number of these ‘contracts’ to make an ok living. At one point I was the sole industrial cleaner across 5 of this companies properties (for first 2 years). This included the standard cleaning of areas within those 5 buildings plus finishing and polishing of 10’s of thousands of flooring feet, and more. I did this 5 nights a week, sometimes all weekend to get a job done. I worked over all holidays as I have no family. I’ve never had a holiday or have taken time off. I thought I was doing a good job and enjoying the work as I picked up one other contact I squeezed into a time slot as a kind of side hustle. This June, I was laid off. I was given 1 week notice. I didn’t like the news, but I didn’t say anything. I was also in shock as I didn’t know what to do. I was told by a human resources manager that it would only be for 2 months. I kept the keys, expecting a call back and I started to look for other work. I applied on line to 6 or 7 jobs. I went to speak to people face to face. I was told by a number of people “oh we’d love to have you! – just apply on line” I got no call backs. I don’t get CERN, or any other benefit. I used up my Christmas money to pay rent for the first 2 months and reluctantly had to accept money from my parents, which really hurt because I didn’t like taking money from them. This job was my main source of income and I had no written contract with the company, just 7 yrs of invoices. I paid all my taxes year to year, they covered NOTHING. No EI, no pension, nothing. It’s now mid October, and have no idea what they are planning to do. The reasoning for the layoff was “work shortage” … 5 months ago. It doesn’t make any sense. They also mentioned “budget cuts”. The job I did is now handled by a 90 pound 45 yr old woman (who was an in-company hire for cleaning for the last 2 yrs) who was told “only do the essential stuff” basically surface cleaning. I don’t know what to do. I wanted a small business and do good work for people and I feel like I was shut out. I feel stupid for not writing up a contract from the beginning, because I feel like this was the primary drive to try and take advantage of me. I didn’t want this. And I am now in dept with my renter, phone provider, car insurance etc. I need help. Any advice would be gold right now. Thanks and have a good weekend.

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1. Courtney Reilly-Larke says:
  
  October 19, 2021 at 9:27 am
  
  Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with a qualified advisor.
  
  Reply