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Is IDEL Constructive Dismissal?

June 10, 2021

The short answer is that we don’t know yet. But the long answer is a bit more complicated.

Since the start of the COVID-19 pandemic, hundreds of thousands of Canadians had their employment interrupted, reduced or terminated either due to government mandated business closures or companies cutting back on labour due to economic considerations.

Normally such changes to an employee’s employment would amount to either a temporary layoff or constructive dismissal. In the case of temporary layoffs, it would become a dismissal if the employee remained laid off for longer than the maximum period permitted under the Employment Standards Act, 2000 (“ESA”).

The government knew that businesses which were forced to close or reduce their workforce for long periods of time would be susceptible to wrongful dismissal claims from their employees and employees might be laid off indefinitely or permanently. It addressed this issue by introducing the Infectious Disease Emergency Leave (“IDEL”). The IDEL amended the ESA so that non-unionized employees whose hours of work are temporarily reduced or eliminated by their employer because of COVID-19, during the period from March 1, 2020 to September 25, 2021, are deemed to be on a job protected emergency leave (an IDEL) rather than a temporary layoff.[1]

This means that employees who remain on an IDEL longer than the period permitted for a temporary layoff under the ESA are not considered to be constructively dismissed under the act and employers need not provide them with termination pay or severance.

However, many in the legal community have continued to wonder whether an employee placed on IDEL would be still be considered constructively dismissed under the common law, despite the changes to the ESA. Two recent cases have explored this issue and reached diametrically opposed conclusions.

Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076

Coutinho was released on April 16, 2021. The court in Coutinho ruled that an employee who was deemed to be on an IDEL could still be constructively dismissed under the common law.

Coutinho’s workplace was closed as of May 1, 2020. She sued her employer, Ocular, alleging constructive dismissal. Ocular defended its actions saying that, under the IDEL, Coutinho was deemed to be on emergency leave and the temporary elimination of her employment duties and work hours did not constitute a constructive dismissal. It brought a motion to have the claim dismissed.

The court rejected Ocular’s request to dismiss Coutinho’s action stating that the IDEL regulation did not affect Coutinho’s right to claim constructive dismissal against Ocular at common law. In reaching this decision, the court relied on section 8(1) of the ESA, which states that the ESA does not affect employees’ civil remedies against their employers. The court found more support for this decision by referencing an online guide published by the Ontario Ministry of Labour, Training and Skills Development which states that the IDEL rules, “affect only what constitutes a constructive dismissal under the ESA. These rules do not address what constitutes a constructive dismissal at common law.

Taylor v. Hanley Hospitality Inc., 2021 ONSC 3135

The judge in Taylor, released on June 7, 2021, disagreed with the decision in Coutinho and ruled that an employee who has been deemed to be on an IDEL cannot be considered to have been constructively dismissed under the common law.

Hanley Hospitality is a Tim Hortons franchisee. It had placed Taylor on a temporary layoff effective March 27, 2020. She was recalled and returned to work effective September 3, 2020. Taylor’s claim alleged that her temporary layoff was a constrictive dismissal and that her employment had been terminated. She suggested that the court should follow the reasoning in Coutinho.

The judge in Taylor rejected that suggestion and found that the court went too far in Coutinho by holding that section 8(1) prevents the ESA from displacing the common law. Rather, the judge ruled that the regulation which created the IDEL “can and did change the common law”. She said, “in these circumstances (COVID), you are not laid off, not constructively dismissed, and you are on a statutory leave of absence”.

The judge specifically rejected the decision in Coutinho stating that it was wrong at law. She then continued, “The Ontario Government recognized the inherent unfairness in subjecting employers to wrongful dismissal claims as a result of the government imposing a state of emergency. If they did not take action, these claims would only serve to make the economic crisis from the pandemic even worse. It is just common sense.

Takeaway

Rather than providing clear guidance, these conflicting decisions leave employers and employees uncertain about whether employees on IDEL are constructively dismissed or on a protected leave of absence under the common law. Taylor’s lawyers have indicated that they will appeal this decision. A decision from the Court of Appeal could provide some much-needed clarity on this issue for both employees and employers.


[1] The end date of the IDEL has been adjusted several times and there is a good possibility that it will be extended past the current July 5, 2021 end date.