Ontario Government Passes Regulation to Create Flexibility in the Hospitality, Tourism and Trade Show Industries

On December 17, 2020, the government of the Province of Ontario enacted Regulation 764/20, which will permit unions and employers in the hospitality, tourism, and trade show industries to negotiate for greater flexibility in the application of termination pay, severance, recall rights and other related matters under the Employment Standards Act, 2000 (ESA). Among other things, this regulation provides that if the employer and union agree:

• An employee represented by the union may lose his or her right to elect to be paid termination pay and severance under the ESA and instead be deemed to retain the right to be recalled.
• Where the union elects to retain the right to be recalled on behalf of some or all of the employees:

“1. The election is binding on the employee in respect of whom it is made unless the employee elected to be paid prior to the trade union’s election.”

2. The employee may not renounce the right to be recalled before the date agreed to by the employer and the trade union.

3. The trade union may not renounce the right to be recalled on behalf of the employee.”

• If the union does not elect to retain the right to be recalled on behalf of an employee, that employee will retain the right to elect to receive termination pay and severance pay (if applicable) and, upon making such an election, would be deemed to have renounced the right to be recalled.
• An employee who retains recall rights and accepts a recall to employment made under the recall provisions would “be deemed to have abandoned the right to termination pay and severance pay.”
• If an employee’s right to be recalled under the collective agreement expires, the employer is required to “pay termination pay and severance pay to which the employee is entitled forthwith to the employee and, if the right to be recalled had not expired, the employee shall be deemed to have abandoned the right.”

Key Takeaways

The purpose of this regulation appears to provide employers and unions in the hospitality, tourism, and trade show industries greater flexibility in terms of maintaining employment relationships pursuant to their collective agreements. In addition, the regulation is intended to prevent employers in these industries from bearing the costs of statutory termination and severance entitlement where a right to such entitlements is triggered only by reasons beyond the parties’ control (e.g., the COVID-19 pandemic).

Given that these industries are among the hardest hit by the COVID-19 crisis and its economic consequences, the regulation may bring welcome relief for some employers and the unions representing their workers. It remains to be seen whether the regulation will be adopted by employers and unions in these industries.