Throughout the COVID-19 pandemic, an influx of employment law issues has flooded law offices and courtrooms across the country. We have written previously about a number of these issues, including paid sick leave for COVID-19, remote work, and workplace responsibilities, to name a few. One change the Ontario government implemented over the past year was to relax the rules for employers with respect to temporary layoffs.

In light of various imposed business closures or reductions, several employers have found themselves with a reduced need for staff. However, there are strict rules around the maximum length of a layoff, to keep employees from being left in limbo indefinitely. Due to the extraordinary circumstances of the pandemic, however, the provincial government enacted a Regulation extending the time period for a temporary layoff by deeming these employees to be on an Infectious Disease Emergency Leave. This would allow an employer to keep employees off of work for a longer period of time without triggering a termination.

However, just because an employee is on a deemed leave does not mean they are prohibited from bringing a claim for constructive dismissal against their employer. This was demonstrated in a recent Ontario Superior Court of Justice case, Coutinho v. Ocular Health Centre Ltd. In this case, the Court confronted the issue of the common law right to sue for constructive dismissal. In fact, the Court found that O. Reg. 228/20: Infectious Disease Emergency Leave (IDEL Regulation), does not preclude a laid-off employee from using their right to sue for constructive dismissal even though they may have been on emergency leave.  

Temporary Layoffs & “Deemed” Infectious Disease Emergency Leave

As per the Regulation enacted under the Employment Standards Act, an employee is deemed to be on “infectious disease emergency leave” where certain requirements are met. Moreover, a number of emergency leave cases are precluded from constituting a constructive dismissal under the legislation. The court outlined five conditions to be satisfied for the Regulation to apply:

  1. The employee cannot be represented by a trade union.
  2. The employee must be subject to a temporary reduction or elimination in hours of work and/or wages.
  3. The employer must have temporarily reduced or eliminated the employees’ hours of work and/or wages.
  4. The temporary reduction or elimination of the employees’ hours of work and/or wages must have occurred for reasons related to COVID-19, and
  5. All of the above conditions must occur during the defined COVID-19 period.

COVID-19 Emergency Leave or Constructive Dismissal?

Coutinho, the Plaintiff, was employed by Ocular, an ophthalmic clinic operator, as a technician in 2014 and was promoted to office manager in 2018. After a dispute erupted in the office concerning Ocular’s principles and its ophthalmologists, one of the principles changed the locks to the premises. When Coutinho arrived at work the following day, she was advised that she would not be allowed entry. The plaintiff returned home and upon her arrival, she received a phone call from the principal informing her that the office is closed and that he would follow up with her in a week. She was specifically warned not to discuss this conversation with the doctors. 

Several weeks later, and without any follow-up, Coutinho received a letter informing her that Ocular was forced to close the clinic she worked in. As a result, Coutinho was being placed on temporary layoff. This temporary layoff occurred during the COVID-19 pandemic. Coutinho became re-employed with some of the ousted ophthalmologists at their new clinic a couple of months later.

On June 1, 2020, Coutinho brought an action against her employer, Ocular, seeking damages amounting to $200,000 for constructive dismissal under the common law and for punitive or aggravated damages.

Among Ocular’s pleadings, it argued that pursuant to the Regulation, Coutinho was deemed to be on emergency leave due to the timing of the layoff period. As such, the temporary pause of her employment did not constitute a constructive dismissal.

Constructive Dismissal is a Common Law Right Even During COVID-19  

The Court ruled that the Regulation did not affect Coutinho’s right to pursue a civil claim for constructive dismissal at common law. Noting the lack of reported cases interpreting or considering the Regulation, the court turned to the Employment Standards Act, online publications from the provincial government, and jurisprudence to help shed light on the matter.

As per Bristol-Myers Squibb v. Canada (Attorney-General), the Court reasoned that the scope of the IDEL Regulation is constrained by its enabling legislation, the Employment Standards Act. As such, the Court held that s. 8(1) of the Employment Standards Act limits the Regulation’s provision regarding situations that preclude a constructive dismissal. Section 8(1), the court stressed, “unequivocally provides that an employee’s civil remedy against her/his employee shall not be affected by any provision of the Act.”

The Court further turned to the Ministry Guide, which offered “insight into the Ministry’s intention in promulgating the provisions of the IDEL Regulation respecting constructive dismissal.” Specifically, the Ministry Guide states that the provisions of the IDEL Regulation on constructive dismissal do not affect an employee’s common law right to bring a civil claim of constructive dismissal. Furthermore, citing the well-established common law rule expounded in Elsegood v. Cambridge Spring Service, the court acknowledged that at common law, an employer does not retain the right to lay off an employee and, “absent an agreement to the contrary, a unilateral layoff by an employer is a substantial change in the employee’s employment, and would be a constructive dismissal.”

The impact of this case on the status of COVID-19-related temporary layoffs should not be underestimated by employers or employees. The Ontario Superior Court of Justice addressed the repercussions of Ontario’s surge in temporary layoffs due to the pandemic. Although many employers sought recourse by temporarily laying off employees, this may likely come with unwanted consequences for employers, as such layoffs may still provide employees with a common-law claim for constructive dismissal.    

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 including 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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