Infectious Disease Emergency Leave and Constructive Dismissal Claims
In May 2020, the Ontario government passed the Infection Disease Emergency Leave of Absence provisions (IDEL) which deemed temporary eliminations or reductions to an employee's hours or wages as being an emergency leave of absence, and not a constructive dismissal of employment. The IDEL was in response to the COVID-19 triggered state of emergency having shuttered businesses across the province, forcing them to close doors and reduce their workforce for periods of times.
The question arose, however, as to whether the IDEL could effectively preclude an employee from suing their employer in courts under the common law for constructive dismissal.
This issue was finally considered by the Ontario courts in April 2021, first in Coutinho v. Ocular Health Centre., 2021 ONSC 3076, and shortly after in Taylor v. Hanley Hospitality Inc., 2021 ONSC 3135. Interestingly, the courts reached completely different conclusions in these two cases.
Comparing Case Law
Coutinho v. Ocular Health Center
In Coutinho v. Ocular Health Center (Coutinho), Ms. Coutinho was placed on a paid leave of absence between May 1 to May 28, 2020. On May 29, 2020, she was temporarily laid off and was told that they would try to recall her. On June 1, 2020, Ms. Coutinho sued. She claimed she was constructively dismissed and sought both her common law and statutory entitlements. She did not resume employment.
Ocular brought a summary judgment motion to dismiss Ms. Coutinho's claim. It claimed that Ms. Coutinho's temporary reduction and elimination of hours was due to COVID-19 and she was deemed to be on an emergency leave, and as such she was not constructively dismissed.
In this case, the court held that the IDEL provisions only prevent an employee from treating a temporary layoff as a constructive dismissal for the purposes of the ESA, not the common law. Ms. Coutinho was constructively dismissed from employment because of the temporary layoff, and was entitled to bring an action for common law damages.
Taylor v. Hanley Hospitality Inc.
Less than two months later, the decision for Taylor v. Hanley Hospitality Inc. (Taylor) was released. The employer in this case effectively ran (and continues to run) Tim Horton's storefronts.
In this case, Ms. Taylor was temporarily laid off from March 27, 2020 to September 3, 2020. Here, she did return to work. Nonetheless, Ms. Taylor claimed that her temporary layoff was a constructive dismissal and that her employment was terminated. She sued for wrongful dismissal damages.
The key issue in Taylor is nearly identical to the issue in Coutinho.
Tim Horton's took the position that the IDEL barred Ms. Taylor from bringing a lawsuit as she was on a deemed emergency leave of absence. As such, Tim Horton's brought a summary judgment motion to dismiss the action. In response, Ms. Taylor's arguments mirrored those of Ms. Coutinho's, in that the layoff was not due to COVID-19, and that in any event the IDEL did not prevent her from suing under the common law.
Interestingly, in direct contrast to Coutinho v. Ocular Health Centre, the court held that the IDEL provisions do prevent an employee from suing their employer for constructive dismissal under the common law.
Unlike in Coutinho, Judge Ferguson in Taylor emphasized the importance of the context of COVID-19 in interpreting the IDEL. During the pandemic and in the government ordered state of emergency, employers were forced to close their storefronts, and correspondingly layoff employees or reduce their hours. In enacting such laws, the legislature exposed employers to common law constructive dismissal suits. To avoid these severe consequences, the legislature therefore amended the ESA to limit employers' liability for constructive dismissal.
Judge Ferguson stated that “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.”
The court concluded that all temporary layoffs during the COVID-19 period (currently March 1, 2020 to July 3, 2021) and relating to COVID-19 are to be deemed IDELs governed by rights for statutory leave. Put simply, temporary layoffs are not constructive dismissals, and common law arguments for layoffs are inapplicable to these cases.
As a result, the employee’s wrongful dismissal claim was dismissed.
Takeaways
Thus far, the two decisions that have considered the impact of the IDEL on constructive dismissal claims during COVID-19 have resulted in very different results. To the date of posting this blog, it appears that Coutinho is being appealed, and the same may be true for Taylor.
This remains a very live issue, and one of significant importance to many employers and employees across Ontario. We encourage both employers and employees to stay tuned for further developments in this ongoing saga.
Given the complex and changing interpretation of the IDEL and constructive dismissal claims, employers and employees alike are encouraged to seek legal assistance in cases like these. Lee Workplace Law would be happy to answer any questions or concerns you may have about constructive dismissal.
