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The IDEL and Constructive Dismissal

November 11th, 2021 in Employment & Severance

On June 7, 2021, the Ontario Superior Court of Justice released another decision on the issue of whether an employee who has been temporarily laid off due to the COVID-19 pandemic has been constructively dismissed pursuant to the common law. In pre-COVID times, an employee who had not previously agreed to be subject to temporary layoffs would be deemed constructively dismissed pursuant to the common law if their employer substantially reduced or eliminated their hours of work. This meant that the employee was entitled to severance pay.

During the COVID-19 pandemic, however, the Ontario government introduced legislation which provided that a temporary reduction or elimination of an employee’s hours of work for reasons related to COVID-19 does not constitute a constructive dismissal under the Employment Standards Act (the “ESA”). Instead, the employee was deemed to be on an Infectious Disease Emergency Leave (“IDEL”). The government did not address whether this legislation impacted the common law – which left the issue for the Courts to decide.

On April 27, 2021, the first decision to consider this issue was released. In this decision, Coutinho v. Ocular Health, 2021 ONSC 3076, the Court distinguished between constructive dismissal under the ESA and common law constructive dismissal. The Court held that employees placed on IDEL (i.e., those who had their hours of work reduced or eliminated for reasons related to COVID-19) could still be constructively dismissed pursuant to the common law, even though they were not constructively dismissed under the ESA.

The decision released on June 7, 2021, Taylor v. Hanley Hospitality Inc., 2021 ONSC 3135, came to the opposite conclusion. The Court held that an employee who had their hours of work reduced or eliminated because of COVID-19 was not constructively dismissed under the ESA or the common law. The Court agreed with the employer that the government enacted the IDEL legislation to “solve the very problem it had created” by its decision to close businesses across the province. The Court held that it was clear that the government’s intention in enacting the IDEL legislation was to displace the common law, otherwise, the legislation would be of limited value.

So, which decision is correct? The consensus outside the courtroom appears to be that Coutinho will ultimately come out on top.  Many lawyers and academics have released blogs on the Taylor decision, and while there is at least one blog that supports the reasoning in Taylor, the weight of opinion rests with Coutinho. Commentaries supporting the Coutinho decision emphasize that the IDEL provisions are contained in a part of the ESA that is meant to provide additional protection to employees, not take rights away. They also point to the text of the ESA itself, which states that no civil remedy of an employee against his or her employer will be affected by the Act, as well as guidance from the Ministry which provides that the ESA was never meant to modify or change the common law.

Ultimately, the debate will not be resolved until a higher court steps in to provide a definitive pronouncement. We understand that both decisions are being appealed, so we can hopefully expect some clarity in the coming months.

In our view, the Court got it right the first time. We agree that the section of the ESA under which the IDEL legislation was introduced is intended to protect the rights of workers, not eliminate them. We also share concerns regarding the impact the Taylordecision may have in non-COVID times. Specifically, how will the Taylor decision affect the pre-COVID ESA rules regarding layoffs, are they now displaced by the common law as well? This has not been the state of the law in the past, and for good reason, however, the Taylor decision certainly opens the door to such an argument.

We will be closely watching the developments in this area of the law and will provide our readers with further updates as they arise. In the meantime, if you have been temporarily laid off, or have other questions about your employment, please contact one of our experienced employment lawyers.

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