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Legal impacts of the pandemic in manufacturing

Employees and employers are grappling with an ever-changing legal landscape as COVID-19 wears on


Photo: Blue Planet Studio/Getty Images

The COVID-19 pandemic has caused seismic shifts in the manufacturing sector, both in Ontario and around the world.

Some industries, like home goods, have seen a massive boom in demand. Others, such as apparel and automobiles, have been plagued with pandemic-related supply chain, production, logistics and demand issues.

Amid these economic factors, manufacturers must contend with a shifting legal landscape, which presents new risks and opportunities for employers and employees alike.

Risks of pandemic layoff

The extreme economic shifts associated with the pandemic have necessitated widespread layoffs. Surprisingly, a recent ruling from the Ontario Superior Court held that even a pandemic-related layoff can amount to a “constructive dismissal” at common law.

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This means that employees who have been laid off, or have had their hours significantly reduced, may quit and sue as if their employment had been terminated. The right to claim damages for constructive dismissal, however, can be constrained with a properly worded employment agreement. The companies at greatest risk of liability are those who did not have the foresight to regularly update their employment contracts before the start of the pandemic.

Toronto and Peel – mandatory shutdown for workplace outbreaks

Workplaces in Toronto and Peel Region that experience five or more COVID-19 cases in short succession must shut down completely for a minimum of 10 days. This presents a special risk for manufacturing employers, which frequently need large contingents of employees to work together in close quarters.

The risk of shutdown is high, and the consequences costly: for many manufacturers, a 10-day shutdown costs much more than the 10 days of lost production. A shutdown requires ramp-up and ramp-down, may interfere with delivery on purchase orders, damages client and supplier relationships, can result in warehousing and storage issues, and can result in product spoilage.

Paid sick day policies

One valuable tool for controlling workplace spread of COVID-19 is paid sick days. Recently, a Toronto-based snack-food manufacturer reported that its 14-day sick leave policy actually saved the company money over the course of the pandemic, by limiting community spread, and allowing the business to operate continuously throughout the pandemic.

This is not to suggest that every company should have a 14-day sick leave policy, however it does fuel the debate as to what amount of sick leave can generate a positive employee response and outcome, rather than policy abuse.

Paid sick days are now mandatory: under a law which will be in effect until September at the earliest, employees are entitled to three paid sick days per calendar year. Our advice to employers is to encourage employees to use these sick days, where appropriate. Communication is key – unexcused absenteeism should never be tolerated, but employees should know that it is wrong to come to work when they feel ill.

WSIB reimbursement for paid sick days

Employers may apply to the WSIB for reimbursement of the legislated mandatory paid sick days, regardless of how much (if any) the company pays in WSIB premiums. The reimbursement for sick days does not affect the company’s WSIB account or future premiums.

Other strategies to promote employee safety

Encouraging employee safety is not only about implementing rules: employees need to be incentivized to make safe decisions and discouraged from working unsafely.

On the incentive side, we advise employers to offer paid time off for vaccination. Doing so not only helps employers keep track of who has been vaccinated, it generates valuable employee goodwill. As an added benefit, employers may also seek reimbursement from the WSIB for absences due to COVID-19 vaccination, and recovery from vaccine side-effects.

Occupational health and safety considerations

Rules and policies play a major part in workplace safety. The Ontario Ministry of Labour provides a very detailed set of rules related to COVID-19 under the Occupational Health and Safety Act (OHSA), including specific guidelines for the manufacturing sector.

Those duties include a general edict to maintain a safe working environment. Many basic measures to this effect are well-understood, including, screening, mask-wearing, social distancing, cleaning and ventilation. Compliance is key, as inspectors continue to make surprise workplace visits to issue fines, and in a few cases, stop-work orders.

Vaccine-or-mask policies

As most employers know, mandatory vaccination policies are legally problematic due to potential violations of the Human Rights Code. On the other hand, a tried-and-true strategy for controlling workplace spread of infectious disease is a vaccine-or-mask policy.

The rule is simple and can be enforced by foremen on the shop floor: if you have not been vaccinated, you must wear a mask at all times. Labour arbitrators have upheld such policies long before the COVID-19 pandemic.

WSIB coverage for workplace infections

No matter how careful companies are, the risk of workplace COVID-19 infection is ever-present. In these cases, employers and employees may look to the WSIB for coverage.

For most manufacturing workplaces in Ontario, WSIB coverage is mandatory. For participating workplaces, the WSIB covers claims from employees infected with COVID-19, where there is evidence that elevated workplace risks “significantly contributed” to the condition.

If a workplace has been shut down by a public health agency, this may be evidence enough. WSIB will not, however, provide coverage for employees impacted by the shutdown who are not infected with COVID-19.

John Hyde is managing partner at Hyde HR Law.