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Conflicting Decisions Create Confusion for Employees and Employers When it Comes to Layoffs During the COVID-19 Pandemic

July 22nd, 2021 in Employment & Severance

As more and more Canadians get vaccinated, we have begun to see the effects of the pandemic slowly fading. Businesses are starting to operate again and employees are finally getting back to the office. In fact, some employees who were purportedly “temporarily laid off” during the pandemic are now being recalled to work. As we discussed in a previous blog, the Ontario Courts have recently assessed the legal implications of the Government of Ontario’s introduction of Regulation 228/20: Infectious Disease Emergency Leave (“IDEL”), which purports to allow employers to temporarily reduce or eliminate their employees’ hours of work or wages for reasons related to COVID-19.

What is the Status of the Law?

The issue of how this Regulation interacts with the common law was first dealt with in the Coutinho decision, which we touched on in a blog in May. In this decision, the Court held that the Regulation did not prevent employees who had been temporarily laid off for reasons related to COVID-19 from bringing an action for constructive dismissal under the common law. Since this decision was released, there have been two more decisions (which are discussed below) that address this precise issue, one of which reaches the opposite conclusion. Unfortunately, these conflicting decisions have resulted in a relatively unsettled legal status regarding whether or not the IDEL prohibits an employee who has been temporarily laid off from bringing an action for constructive dismissal under the common law.

Taylor v. Hanley Hospitality 1

The Taylor decision bodes well for employers seeking to enforce the provisions of the IDEL Regulation to exclude the applicability of the common law. In Taylor, the plaintiff worked at a Tim Hortons franchise. Like many other employees during the pandemic, the plaintiff, Ms. Taylor, was temporarily laid off on March 27, 2020. On August 18, 2020, Ms. Taylor was informed that she was being recalled to her employment on September 3, 2020. On that date, Ms. Taylor returned to her duties at Tim Hortons and has maintained her position of employment ever since.

Despite the precedent set in Coutinho, Justice Ferguson stated that she was not bound by that decision as she had determined that the analysis used in Coutinho was wrong in law. 2 In coming to the conclusion that Ms. Taylor was not constructively dismissed, but instead placed on IDEL, Justice Ferguson wrote “the law would be better served by a decision that applies common sense and the rules of interpretation to reach the conclusion sought by the defendant.” 3 She went on to note that exceptional situations, such as the pandemic, call for exceptional measures. The IDEL, although exceptional, was deemed to validly oust the common law. The Taylor decision, like the Coutinho decision, is currently being appealed.

Fogelman v. IFG 4

In the newest decision involving this issue, Justice Vella followed the decision in Coutinho in determining that a regulation under the Employment Standards Act, 2000 5 (the “ESA”) does not oust the remedies available to an employee at common law. Section 8 of the ESA states that “no civil remedy of an employee against his or her employer is affected by this Act.” 6 The Fogelman decision supports this section by upholding an employee’s right to seek damages at common law for constructive dismissal and that such damages are not prohibited by the IDEL regulation created under the ESA.

What will Happen from Here?

We are of the opinion that the Court in the Coutinho and Fogelman decisions were correct in noting that the ESA can not take away an employee’s right to seek a common law remedy. In fact, the Government of Ontario’s website explicitly states that the rules created under the IDEL regulation only affect what constitutes a constructive dismissal under the ESAand do not address what constitutes constructive dismissal at common law. Although all of the decisions we have addressed in this blog will likely be appealed, we are confident that an employee will maintain their right to bring a claim for constructive dismissal at common law even despite the IDEL.

Key Takeaways for Employees and Employers

If you have been laid off as a result of the pandemic, it is important that you reach out to an experienced employment lawyer to discuss your options. Without even knowing it, you may be entitled to notice pay as a result of being laid off. It is crucial that you seek legal advice as soon as possible after being laid off to ensure that your rights are adequately protected.

On the other side, if you are an employer who is considering laying off employees due to the pandemic, you should first speak to a qualified employment lawyer to understand your options. Perhaps even more importantly, if you have already made the decision to lay off employees and are now concerned about the prospect of owing them notice pay, it is critical that you seek immediate legal advice to ensure you mitigate any potential exposure to lawsuits.

Vice & Hunter LLP is Equipped to Handle Your Case

Our firm has the knowledge and experience to help guide you through the legal process. Whether you are an employee or an employer, our accomplished litigation team has the tools to provide you with sound legal advice for every scenario. We look forward to discussing how we may assist you in making important legal decisions for yourself or your business.

Contributors for this blog include J.F. Lalonde, Lauren Benoit and Andrew Donaldson.

[1] Taylor v. Hanley Hospitality Inc., 2021 ONSC 3135.

[2] Ibid at para 21(xiv).

[3] Ibid at para 21(xvi).

[4] Fogelman v. IFG, 2021 ONSC 4042.

[5] Employment Standards Act, 2000, S.O. 2000, c.41.

[6] Ibid at s. 8.