Jul 28, 2020  By John Hyde

COVID-19 Critical Updates for Employers

COVID-19: Critical Updates for Employers

COVID-19 has had a monumental impact on business in this country.  As the situation rapidly evolves, our federal and provincial governments have responded with extraordinary measures to help businesses stay afloat and keep their workers employed. Below we discuss some of the most recent changes affecting employers.

Canada Emergency Wage Subsidy

The Federal Government has recently proposed significant changes to CEWS which are estimated to cost this country $83.6 billion.  The draft legislation is intended to assist employers by extending the program to December 19, 2020 and making it available to employers who experience any decline in revenue.

This should be welcome news, both to employers who did not previously meet the 30% decline in revenue, and to those who did not receive any additional assistance for being substantially over the 30% threshold.

Currently, a Canadian employer whose business has been affected by COVID-19 may be eligible for a subsidy of 75% of employee wages for up to 24 weeks, retroactive from March 15, 2020 to August 29, 2020, so long as the employer meets certain eligibility criteria, including a 30% reduction in revenue for the corresponding claim period. 

With the proposed changes, in contrast to the current “one-size fits all” approach, the subsidy will be available to all eligible employers who experience a reduction in revenue, with the amount of the subsidy directly correlated with the amount of the reduction in revenue. A top-up subsidy will also be made available to employers who experience a three-month average revenue drop of more than 50 percent.

The precise amount of the subsidy will now be determined by new calculations which take into account the amount of the revenue drop over the claim period, the employee’s remuneration and, in the case of employers eligible for a “top-up”, a three month reference period.

By way of example, an employer which has a 25% revenue reduction for the claim period of July 5, 2020 to August 1, 2020, would not be eligible for CEWS under the current criteria, despite that being a devastating blow to any business.  Under the proposed changes however, that employer would be eligible for a subsidy representing 30% of the employee’s wages during the claim period, up to a maximum of $677 per week.

By way of further example, consider that, under the current criteria, an employer who has a 70% reduction in revenue over a three-month period, would be eligible for the same subsidy as if they only had a 30% reduction in revenue – despite that difference being staggering. Under the proposed changes, that employer would now be eligible for a subsidy representing 85% of an employee’s wages, up to $960 per employee.

The draft legislation also confirms that employer contributions to CPP and EI would continue to be refunded, and includes many other changes intended to make the program more accessible.

Overall, this should help many businesses recall employees back to work as economies have gradually reopened across Canada.

Ontario State of Emergency, No Longer

The Feds’ proposed expansion of CEWS is particularly timely for employers in Ontario as the Declared State of Emergency appears to have not been extended past July 24, 2020, which means many employees will soon be recalled to work.

On May 29, 2020, the Ontario government made changes to the Employment Standards Act (ESA), which insulated employers from Ministry of Labour claims involving temporary layoffs that would otherwise become automatic terminations. As a result of those changes, employees who were temporarily laid off due to COVID-19 were deemed to be on an Infectious Disease Emergency Leave, with a right to reinstatement within six weeks following the end of the declared State of Emergency in Ontario.  Accordingly, as of this writing, these employees have a right to reinstatement by September 4, 2020. They may also be deemed terminated if not recalled to work within that time.

Reinstating an employee can be tricky in the best of circumstances. This is no doubt complicated by the enigmatic nature of the pandemic and its impact on many businesses. The obligation is to reinstate the employee to the position most recently held if it still exists, or to a comparable position, if it does not. 

While an employer is not required to create a new position for the employee, many issues can arise when terminating an employee returning from leave, particularly if the employee’s layoff interacted with other job protected leaves (i.e. disability, parental leave), or there are potential human rights issues at stake.

These decisions must be made very carefully and only in consultation with experienced employment law counsel.  

Suspension of Procedural Deadlines and Limitation Periods Coming to an End

Amid the outbreak of the pandemic, Ontario took the extraordinary step of suspending procedural deadlines and limitation periods (“O. Reg. 73/20”).  As such, many lawsuits halted to a standstill, with parties not particularly inclined to move their matters forward.

Ontario recently extended the suspension of limitation periods and time periods until September 11, 2020, which is the maximum renewal period allowable under the Emergency Management and Civil Protection Act. Lawsuits that have been issued prior to or during the pandemic, should be given attention and reviewed with counsel, as procedural deadlines will soon be enforced. 

Throughout the pandemic, we have been helping companies manage their workforce and make sound business decisions.  Contact the experts at Hyde HR Law today for advice on these and other employment law matters.  

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