It’s been a busy summer in the employment law world. COVID-19 has continued to have an impact on legislative decisions and case law, and there have also been developments in other areas of interest. In this PH Report, we discuss some of the recent COVID-19 related announcements, the new statutory holiday for federally regulated employees and the impact of a new case on statutory severance for certain employees in Ontario.
New Statutory Holiday - National Day for Truth and Reconciliation
The federal government recently passed legislation that will have an impact on federally regulated employees’ entitlements.
Bill C-5, An Act to amend the Bills of Exchange Act, the Interpretation Act, and the Canada Labour Code received Royal Assent on June 3, 2021, and created a new statutory holiday called the National Day for Truth and Reconciliation.
The National Day for Truth and Reconciliation will be observed by the federal government and federally regulated workplaces each September 30th beginning in 2021. This holiday was established in response to the Truth and Reconciliation Commission’s Call for Action to establish a holiday to honour the survivors of residential schools, their families, and communities.
Each year on September 30th, federally regulated employees will be entitled to pay for this holiday as with all other statutory holidays. Please also note that this holiday does not replace any other holidays and has been established as a new statutory holiday.
Changes to Bereavement Leave for Federally Regulated Employees
On June 29, 2021, Bill C-220, An Act to Amend the Canada Labour Code (bereavement leave) received Royal Assent. Bill C-220 changes federally regulated employees’ bereavement leave entitlements in two major ways:
Bill C-220 expands the group of family members for which bereavement leave can be taken. In addition to immediate family members, entitlement to bereavement leave now includes family members of the employee who at the time of their death, were cared for by the employee while on a critical illness leave or compassionate care leave under the Canada Labour Code.
Bill C-220 also increases the potential length of bereavement leave for federally regulated employees from five days to ten days. Previously, federally regulated employees were permitted to take a total of five days of bereavement leave, of which the first three days were paid (when the employee has three consecutive months of continuous service with the employer) and the remaining two were unpaid. Bill C-220 now permits employees to take an extra five days of unpaid bereavement leave.
Bill C-220 will come into force on September 29, 2021.
Changes to COVID-19 Programs
1. Changes to the Work Sharing Program Extended
The federal government’s Work Sharing Program helps employers and employees avoid layoffs when there is a temporary reduction (of at least 10%) in the normal level of business activity “beyond the control of the employer.” In the immediate response to COVID-19, the federal government made temporary changes to the Work Sharing Program in order to provide income support to employees eligible for Employment Insurance (“EI”) benefits, whose work week was temporarily reduced while the employer took steps to recover from the impact of COVID-19.
The temporary changes included:
shortening the Work Sharing Program start date from 30 days after the date of the employer’s application to 10 days; and
extending the duration of the program from 28 weeks to 76 weeks and changing certain eligibility requirements.
The federal government recently announced that the temporary changes will be extended to September 24, 2022, and employers may be eligible to apply for a subsequent 26-week agreement.
Employers are encouraged to visit the Work Sharing Program website to understand the eligibility requirements and to download the application form.
2. Extension of the Canada Emergency Wage Subsidy and other COVID-19 Benefits
The federal government recently announced that the Canada Emergency Wage Subsidy (CEWS), a wage subsidy developed in response the economic hardship caused by the COVID-19 pandemic, will be extended until October 23, 2021. CEWS was previously set to end on September 25, 2021. The federal government has the ability to extend CEWS further until November 20, 2021.
The federal government has also proposed an increase to the maximum CEWS subsidy rate from 20% to 40% between August 29, 2021, and September 25, 2021 (Period 20). Similarly, as the federal government has now extended the CEWS beyond the end of Period 20 until October 23, 2021, it has proposed that the rate for the period between September 26, 2021 and October 23, 2021 be a maximum of 20%.
In addition to the CEWS extension, the federal government announced that it is extending the Canada Recovery Benefit (CRB), the Canada Recovery Caregiving Benefit (CRCB), and the Canada Recovery Sickness Benefit (CRSB) until October 23, 2021.
3. Infectious Disease Emergency Leave Reminder
The Ontario government announced that it is extending the Infectious Disease Emergency Leave (IDEL) to September 25, 2021. The IDEL was most recently set to end on July 3, 2021. It remains to be seen whether there will be yet another extension beyond September 25, 2021.
For more information on the IDEL and how employers should approach employees who remain on the IDEL, see our previous PH Report and blog post.
Case Law Update
A. Changes to Severance Pay Obligations in Ontario
Earlier this summer, the Ontario Divisional Court released a decision, Hawkes v. Max Aicher (North America) Limited, which will impact the way severance pay eligibility under section 64 of the Employment Standards Act, 2000 (the “ESA”) is determined.
Recall that in accordance with the ESA, an employer is required to pay a terminated employee severance pay if two conditions are met:
The employee has at least five years of service; and
The employer’s payroll is at least 2.5 million dollars.
What constitutes a “payroll of 2.5 million dollars” has been up for debate over the years, but up until Hawkes, it had been settled law that employees were required to consider only their payroll in Ontario.
In Hawkes, the court took a meaningfully different approach. Instead, the court found that the approach to the payroll threshold for severance pay under section 64 of the ESA should be based on an employer’s global payroll and not Ontario-only payroll.
This is a significant decision for employers with employees outside of Ontario – be it within Canada or in another country. Specifically, an employer with a small operation in Ontario but large Canadian or international presence may now be on the hook to pay severance pay to eligible employees, unlike previous terminations. For example, if an employer has a payroll of 2.5 million dollars based on this new criteria, a terminated employee with 6 years of service would not only be entitled to 6 weeks of notice or pay in lieu of notice under the ESA but also approximately 6 weeks of severance pay on top of that, in addition to any common law obligations.
Employers should note that in light of Hawkes, recently terminated employees who have not yet signed a release could now claim an entitlement to severance pay. Unfortunately, this is yet another challenge for employers, in addition to the uncertainty regarding termination provisions in recent case law.
It is possible that Hawkes will be appealed, however, until that time, previously exempt employers with global operations should consider how this decision impacts their termination obligations.
B. Infectious Disease Emergency Leave and Constructive Dismissal
We previously wrote about two decisions from the Ontario Superior Court of Justice that addressed the Infectious Disease Emergency Leave (IDEL) and constructive dismissal. Specifically, we reviewed the court’s approach in both Coutinho v Ocular Health Centre Ltd., 2021 ONSC 3076 and Ristanovic v Corma 2021 ONSC 3351 where it was found that although employees cannot claim that they were constructively dismissed under the ESA by virtue of the IDEL regulation, the regulation did not impact the right to sue for constructive dismissal at common law.
This continues to be the most talked about topic in employment law. Since our initial blogs in May 2021, the courts have released new decisions on this topic. In June 2021, the court reached two diverging conclusions.
In Fogelman v IFG – International Financial Group Ltd. (this decision has not yet been published online, but please reach out if you wish to obtain a copy), the court’s conclusions were consistent with the findings in Coutinho and Ristanovic.
However, in Taylor v Hanley Hospitality Inc., 2021 ONSC 3135, the court held that where temporary layoffs occurred because of COVID-19, the IDEL regulation did in fact oust the common law claim for constructive dismissal as a result of a temporary layoff.
At this time, we’re left with varying decisions with opposing outcomes.
Each decision is fact-specific and addresses slightly different situations. We continue to monitor these decisions, some of which are under appeal, and any new decisions. The appeals of these decisions could be heard as early as this fall, and the appeal decisions will provide more clarity about the significant potential employer obligations to laid off employees.