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The impact of COVID-19 on the Canadian employment landscape

By Janet Bos | September 9, 2022

What are underwriters considering when evaluating employment practices liability coverage in the wake of COVID-19?
Financial, Executive and Professional Risks (FINEX)
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Employment practices liability (EPL) continues to be challenging as underwriters are required to navigate an ever-changing legal landscape shaped by the COVID-19 pandemic, advances in technology and the impact of remote working. Resulting legislative changes may impact how underwriters view this line of coverage and influence their underwriting strategy.

Uncertainty remains with respect to the impact of COVID-19 and underwriters continue to request additional underwriting information regarding a company’s protocols around COVID-19. Vaccine mandates, return to work policies and resulting wrongful dismissal litigation continue to impact the EPL environment. Wrongful dismissal cases involving employees being let go due to COVID-19 continue to make their way through the Court systems. During the pandemic, the IDEL Regulation (Infectious Disease Emergency Leave)1 under the Employment Standards Act was enacted to prevent an employee who was laid off during the pandemic from claiming constructive dismissal. Constructive dismissal is when an employer changes the terms of an employee employment contract to which the employee does not consent.

However, Courts remain divided on whether employees laid off during the pandemic can claim constructive dismissal. In Coutinho v. Ocular Health Centre Ltd, 2021 ONSC 30762, the Ontario Superior Courts decided that an employee who was placed on temporary layoff due to the pandemic and deemed to be on infectious disease emergency leave had been constructively dismissed. Weeks later, the Superior Court of Justice in Taylor v. Hanley Hospitality Inc, 2022 ONCA 3763, decided that an employee could not pursue a common law claim for constructive dismissal if the basis for that claim was that the employee had been placed on IDEL. The Court of Appeal overruled the Superior Courts Decision, May 12, 20224. Nevertheless, the Court of Appeal did not address the central question of whether an unpaid layoff or deemed IDEL constituted constructive dismissal at common law. These cases illustrate the law is still somewhat ambiguous and unresolved and with the huge backlog in the Courts, it will take months to see how these claims settle.

Despite government restrictions lifted in most provinces, there continues to be questions surrounding the enforceability of mandatory vaccine policies and return to work policies. While the legality of a mandatory vaccination policy remains unclear, an employer’s duty under the Occupational Health and Safety Act to keep workers and workplaces safe and free of hazards remains.

In March 2022, in the Toronto District School Board (TDSB) and CUPE, Local 44004 the arbitrator sided with TDSB’s Vaccine policy that the policy was a reasonable exercise of management rights to take every precaution reasonable in the circumstances for the protection of the worker. Whereas in the case of Electrical Safety Authority v. Power Worker’s Union5, the employer implemented a vaccination policy that requires all employees to be vaccinated or otherwise risk discharge or leave without pay. 88.4% of employees were vaccinated and most of the work could be done remotely. The Arbitrator found the policy was unenforceable to the extent that an employer could discipline or discharge an employee for failing to get fully vaccinated. While vaccination policy cases are sensitive to the specific factual context of each case, the decisions suggest that strict mandatory vaccination policies will be more difficult to uphold in low-risk workplace environments.

During the two years of the pandemic, employees who could, worked from home. Now that restrictions have relaxed, employers are starting to require employees to return to the office. Can an employer force an employee back to the office? To the extent an employee could claim that working from home has become either an express or implied term of their contract, the employer could be faced with allegations of constructive dismissal if they unilaterally tried to change that arrangement. Severance costs could be significant if the initial package falls short of what an employee is owed, especially without consideration of the pandemic environment. Further, when faced with returning to work, some employees may seek accommodation on human rights grounds. Whether based on disability or family status, it may be difficult for an employer to assert that such a request cannot be accommodated when employees have been working remotely for months. Employers will need to balance the requests of employees with needs of their corporation.

On December 2, 2021, Bill 27, Working for Workers Act 2021 was passed in Ontario, including the Right to Disconnect6. As remote working is here to stay, the lack of physical separation between home and work becomes blurred. Bill 27 requires that employers with 25 or more employees have to have a policy in writing that addresses disconnecting from work. The deadline for employers in Ontario to complete their written policies was June 2, 2022. The term “disconnecting from work’ is defined to mean not engaging in work-related communications, including emails, telephone, video calls, or sending or reviewing other messages. The law does not specify what a company should include in its policy and it is left to the discretion of the employer. It will be interesting to see how this will play out as the ambiguity in the legislation could be potentially difficult for both employers and employees to understand how this amendment will affect them and if disputes arise regarding hours worked.

At press time, other provinces or territories have yet to enact similar Right to Disconnect legislation, although Quebec has considered it.

Another key change was Bill 88, Working for Workers Act 20227, which was passed in Ontario and introduced due to the increasing remote or hybrid work environment. Among other amendments, Bill 88, amends the Employment Standard Act 2000 to address privacy concerns through the Ontario Electronic Monitoring Law which states that any employer who employs 25 or more employees must have a written policy in place on the electronic monitoring of workers. This policy must describe how and in what circumstances the employer will monitor the employee and how the data collected is used. An example of electronic monitoring can include tracking the websites that employees visit during working hours, devices or other electronic equipment issued by the employer. To be clear, this new legislation does not give an employee the right NOT to be electronically monitored or create new privacy rights but establishes transparency from employers on how they are tracking their employees. Because more people work from home, there is an increased interest of employers to supervise the performance of their employees and which activities should or should not be monitored when they work from home.

The last two years of the pandemic has had a lasting impact on the employment environment. Claims activity continues to work its way through the system regarding mandatory vaccines, wrongful dismissal and return to work policies. Legislation in Ontario has been developed in response to hybrid or remote work with the passing of the Ontario Right to Disconnect and the Ontario Electronic Monitoring Law. How this legislation will affect the employer/employee relationship remains to be seen.

Footnotes

1 https://www.ontario.ca/document/your-guide-employment-standards-act-0/infectious-disease-emergency-leave

2 https://otlablog.com/coutinho-v-ocular-health-centre-ltd-2021-onsc-3076/

3 https://gowlingwlg.com/en/insights-resources/articles/2022/taylor-v-hanley-hospitality-inc-2022-onca-376/

4 https://hicksmorley.com/2022/05/12/recent-cases-of-note/

5 https://www.dentons.com/en/insights/guides-reports-and-whitepapers/2021/december/21/covid19-case-catalogue

6 https://cassels.com/insights/bill-27-update-working-for-workers-act-2021-becomes-law/

7 https://www.littler.com/publication-press/publication/ontario-canada-bill-88-working-workers-act-2022-receives-royal-assent

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).

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FINEX, Canada

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Talene Carter
EPL Thought and Product Leader, FINEX

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