As COVID-19 restrictions ease across Ontario, business owners and patrons alike welcome a somewhat new-found “normal” state of business affairs. Nevertheless, employment law-related legal issues reminiscent of a far more dismal pandemic reality continue to transform employer rights and duties. In fact, a recent decision released by the Ontario Superior Court on June 7th, almost a month after the same court found that an employee retained her common law right to pursue a civil claim for constructive dismissal despite having been laid off as per the Ontario Infectious Disease Emergency Leave Regulation (IDEL Regulation), has turned its previous ruling on its head. The Court’s contradictory finding, in a similar case involving many of the same issues, has left a protruding question mark among employers and the legal community dealing with COVID-19-related constructive dismissal issues.

Is There a Right to Sue for COVID-19 Constructive Dismissal?     

In its April 27 decision in Coutinho v Ocular Health Centre Ltd.( Coutinho), the Superior Court examined constructive dismissal in light of the IDEL Regulation. As per the Regulation, issued under the Employment Standards Act, 2000 (ESA), employees who have been temporarily laid off due to COVID-19 are deemed to be on a “job-protected infectious disease emergency leave.” The Court ruled that the Regulation did not affect the employee’s right to sue for constructive dismissal at common law, however. Furthermore, at the time, the Court pointed out the lack of reported cases interpreting or considering the Regulation, acknowledging that it was treading in new waters. As such, the Court turned to several interpreting aids, including the ESA, online publications from the provincial government, and jurisprudence.

The decision was received with some surprise from employers and jurists alike, as it established a model exemplifying the supremacy of employee rights in the matter of COVID-19 layoffs. However, this approach has not been adopted as a precedent-setting case and has even been criticized by other judges. In fact, in Taylor v. Hanley Hospitality Inc., an Ontario Superior Court case released earlier this month, Justice J.E. Ferguson rejected the previously accepted view that employees laid off as per the IDEL Regulations still retain their common-law right to pursue a claim for constructive dismissal.

Constructive Dismissal Rights Receive Facelift

The plaintiff and employee in this case, Ms. Taylor, maintained before the Court that her temporary layoff amounted to constructive dismissal. She argued that the ESA and the IDEL Regulation did not supersede her common law right to sue for constructive dismissal, as per Coutinho. However, the Court took a very different stance, extinguishing the plaintiff’s argument at the root, stressing that all “temporary layoffs relating to COVID-19 are deemed to be IDELs,” and as such, these layoffs are “no longer a layoff” and that “any argument regarding the common law on layoffs has become inapplicable and irrelevant.”  The Court continued that in a case of an IDEL, all the habitual rights relating to a statutory leave are applicable, such as, reinstatement rights and a continuation of benefits.

The Court reminded both parties of the overarching legislative context that led to the abounding IDEL-related confusion. Firstly, the legislature created the “problem” by triggering a state of emergency that required employers to shut down or slow their operations. Consequently, the legislature exposed employers to claims of constructive dismissal under the common law, which put many employers across Ontario at risk. Therefore, in an attempt to avoid the outcomes of mass constructive dismissal claims, the ESA was amended to create IDEL and Ontario Regulation 228/20. The Court pointed out that “the legislature solved the very problem that it had created and took away that exposure that arose from its own action.”

The Superior Court noted that the decision in Coutinho failed to consider these underlying factors that set the stage for IDEL and Ontario Regulation 228/20. As such, the Court in the present case submitted that the analysis in Coutinho was “wrong in law”, and the Court was therefore not bound by it.

What Does This Mean for Employers and Employees?

Although the decision in Taylor benefits employers, other recent jurisprudence sides the law with employees, permitting them to sue for constructive dismissal. As such, the current state of employment law in Ontario presents two conflicting cases, both at the Superior Court level. Indeed, this conflict has produced confusion as to employee rights and employer responsibilities in light of COVID-19 layoffs, constructive dismissals, and IDEL. Nevertheless, the very IDEL provisions at issue in the two cases are set to expire in September 2021. As such, the current perplexity is unlikely to last much longer, unless the IDEL provisions are extended.

Contact Ottawa Employment Lawyers Tierney Stauffer LLP

Our experienced lawyers can help minimize your exposure to employer liability, and provide legal advice for various employment concerns- COVID-19-related and beyond. Our team has vast experience servicing clients in areas such as contracts, terminations, and much more. To discuss your legal matter with a member of our employment team, contact Tierney Stauffer LLP in Ottawa, Eastern Ontario and North Bay at 1-888-799-8057 or contact us online to schedule a confidential consultation.


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