COVID-19 Temporary Layoffs Can Be Constructive Dismissal

  • May 20, 2021
  • BakerLaw

On April 16th, 2021, the Superior Court of Ontario held that Ontario’s Infectious Disease Emergency Leave Regulation (IDEL) under the Employment Standards Act does not remove a laid-off employee’s common law right to sue for constructive dismissal.

The IDEL Regulation, which was enacted at the beginning of the COVID-19 pandemic, gave non-unionized employees the right to take unpaid, job-protected, infectious disease emergency leave if they were not performing the duties of their position because of reasons related to COVID-19. The Regulation also gave employers the ability to temporarily reduce or eliminate an employee’s hours, or reduction in wages, for COVID-related reasons . Any such changes, under the IDEL Regulation would not be considered constitute constructive dismissal. This meant that employees placed on temporary leave under the Regulation could not seek damages for constructive dismissal under the Employment Standards Act.

However, the Superior Court found that the statutory regulation does not remove an individual’s right to sue at common law for a reduction in hours or wages.

The case, Coutinho v. Ocular Health Centre Ltd. 2021 ONSC 3076 (link), involved plaintiff Jessica Coutinho who worked as an office manager at the defendant, Ocular Health’s, clinic in Cambridge, Ontario. When Coutinho arrived at work May 1, 2020 she found that the locks had been changed and was later told the office was closed but she would still be paid. On May 29th, she received a letter from her employer informing her that she had been placed on temporary layoff and would no longer receive a salary.

Coutinho filed a statement of claim on June 1st, bringing an action against her employer for constructive dismissal. Ocular argued that the layoff was due to the COVID-19 pandemic, and therefore the elimination of Coutinho’s hours could not constitute constructive dismissal under the IDEL Regulation. Coutinho argued that nothing in the Employment Standards Act or any regulation takes away her common law right to pursue a claim of constructive dismissal.

Justice Broad found in Coutinho’s favour. The Court ruled that the IDEL regulation does not remove Coutinho’s right to pursue a civil claim for constructive dismissal.

This case marks the first decision by the Court of how the IDEL Regulations affect a person’s common law rights. Based on this case, it appears that the Court was persuaded to take a narrow perspective on applying the Regulation – avoiding a broad interpretation which would reduce an employee’s rights at common law.

The past year has seen an unprecedented number of temporary layoffs and wage reductions as employers and employees alike try to navigate the constantly evolving nature of the COVID-19 pandemic. This case could open the door to more common law claims for constructive dismissal following a COVID-related lay-off. While this case may not be the last word on the matter, it is something to keep in mind when considering your options following a lay-off or wage reduction. If you’ve been laid off or would like to discuss an employment law matter (link), contact us to see how we can help (link).

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