What’s New in Pension and Benefits – June 2020

  • June 05, 2020
  • Simon Laxon and Michael Long, Willis Towers Watson

  1. LEGISLATION

ONTARIO CHANGES REGULATIONS FOR INFECTIOUS DISEASE LEAVE

On Friday May 29, Ontario released a new regulation under the Employment Standards Act, 2000 (ESA) that addresses the impact of the infectious disease emergency leave introduced as a result of the COVID-19 pandemic in more detail.  These provisions only apply to non-union employees.

The regulation “deems” a temporary elimination or a reduction in hours of work (“temporary layoff”) because of COVID-19 to be considered a job protected infectious disease emergency leave.   Any employees who were placed on a temporary layoff on or after March 1, 2020 will be deemed to be on the leave. These provisions continue to apply up to six weeks after the end of the COVID-19 declared emergency. This may include employees who cannot work because Ontario ordered their workplaces to be shut down.

As a result of this change in treatment, the provisions in the ESA that deem a temporary layoff to become a termination of employment after a specified period of time on layoff will not apply since this regulation has “stopped the clock” on those time periods.

The regulations also specifically provide that a temporary reduction in hours or wages or an elimination of hours does not constitute constructive dismissal.

Employees on a leave under the ESA, including an infectious disease emergency leave, are normally entitled to continue participating in pension and benefit plans.  However, the benefit continuation rules do not apply to employees on the leave set out above if their participation in pension and benefit plans had ceased on or before May 29, 2020. From a pension perspective this means defined benefit accrual and/or contributions under a defined contribution provision do not need to be provided to any employee whose temporary layoff commenced prior to May 30, 2020 (where that layoff is now deemed to be an infectious disease emergency leave) unless pension and benefits were continuing under the layoff as of May 29, 2020.

ONTARIO ALLOWS ELECTRONIC BENEFICIARY DESIGNATIONS

On May 12, 2020, the Succession Law Reform Act (SLRA) was amended to allow electronic beneficiary designations with respect to certain types of plans, including:

  • Pension, retirement, welfare or profit-sharing funds, trusts, schemes, contracts or arrangements (including a retirement savings plan and a retirement income fund) or funds, trusts, schemes, contracts or arrangements for other benefits
  • Funds, trusts, schemes, contracts or arrangements for the payment of a periodic sum for life or for a fixed or variable term
  • Tax free savings accounts and any other prescribed funds, trusts, schemes, contracts or arrangements

Electronic beneficiary designations with respect to pension plans are already allowed under section 30.1.1 of the Pension Benefits Act. A consequential amendment was made to that provision to remove reference to the SLRA.