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Boards cover the windows of a closed shop on Queen Street West in Toronto on April 28, 2020.

Fred Lum/The Globe and Mail

Ontario is temporarily amending its labour laws to help businesses avoid permanently laying off workers and paying out severance, which could send some into bankruptcy during the COVID-19 pandemic.

The government announced Monday it would amend the Employment Standards Act, which requires businesses to terminate employees who have been laid off for 13 weeks. The law then requires the business to pay severance to workers.

The change will see non-unionized workers who have had their hours reduced or eliminated placed on a temporary leave that preserves their job. Workers will still be eligible for federal emergency income support programs.

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The amendment to the law will expire six weeks after the province’s declared state of emergency ends.

“We’ve heard loud and clear from employers that they don’t want to be forced to terminate their employees,” Labour Minister Monte McNaughton said in a statement. “We have to step in to make sure workers have jobs to return to.”

Last month, Ontario’s fiscal watchdog said 2.2 million people in the province have been affected by the shutdown: an estimated 1.1 million workers in the province have lost their jobs, and another 1.1 million have seen their hours sharply reduced.

According to Statistics Canada, Ontario lost 689,200 jobs in April, bringing its employment down to the lowest level since 2009. The province’s unemployment rate climbed to 11.3 per cent, the highest it has been since 1993.

Small and medium-sized businesses, and groups that advocate on their behalf, had been asking for the temporary change to the province’s labour laws.

The Ontario Chamber of Commerce, Canadian Federation of Independent Business, and Canadian Manufacturers and Exporters have all called for the measure.

They feared that once the terminations were triggered, the severance costs would put many businesses who were struggling to stay afloat during the pandemic, into bankruptcy.

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A spokeswoman for the CFIB said the “13-week clock and the significant termination costs” had been weighing heavily on small employers.

“The new regulation will help businesses stay afloat and keep their employees as we move further into economic recovery,” Julie Kwiecinski said in a statement.

A spokeswoman for second-hand retailer Value Village lauded the move, saying it would help the company and other employers retain thousand of jobs.

“As we work to safely reopen in communities across the province, Value Village is eager to continue to support our team members, non-profit partners and the environment,” Sara Gaugl said in a statement.

NDP employment standards critic Peggy Sattler said the change opens the door to actions that could hurt workers.

“Employees should never be denied access to their severance pay and other basic benefits they earned,” she said. “Any changes to the Employment Standards Act needs to be made with workers at the heart of the decision.”

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Employment lawyer Jonathan Pinkus, a partner at Samfiru Tumarkin LLP said the changes will create conflict between employers and their employees and instead of giving them the chance to work it out within the province’s existing labour laws, this will move cases to civil courts.

“This regulation is extremely one sided,” he said. “The only thing that it does for employees is guarantees them basically the right to reinstatement from these layoffs after the infectious disease leave.”

The amendment will apply retroactively to March 1 and does not include unionized workers who are covered by collective agreements.

The province has also announced legislation to ban employers from requiring sick notes for those in self-isolation or quarantine. It will also ensure protected leave for workers who have to take unpaid leave to isolate themselves or care for others, such as children not in school.

The government has said those measures will be retroactive to Jan. 25.

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