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Date:
2021.04.29

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Wrongful Dismissal

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THE EMPLOYERS' EDGE

Deemed Infectious Disease Emergency Leave Not a Bar to Common Law Constructive Dismissal Claims in Ontario

In what may be the first of many COVID-19 related constructive dismissal claims in Ontario, the Superior Court of Justice determined that employees deemed to be on infectious disease emergency leave (“IDEL”) may still claim constructive dismissal at common law. Employment lawyers have been anticipating a ruling on the issue since early on in the pandemic; unfortunately, it is not good news for employers.

The decision can be found here

By way of recap, the government of Ontario passed a regulation (O. Reg 228/20: Infectious Disease Emergency Leave) under the Employment Standards Act, 2000 (“ESA”) early on in the pandemic. The main effect of this Regulation was to deem any non-unionized employee facing a reduction in hours and or pay as a result of the pandemic to be deemed to be on an IDEL. More importantly, section 7 of the regulation explicitly noted that such a reduction in hours or pay would not constitute a constructive dismissal if it occurred during the statutory “COVID-19 period”. More information on that regulation can be found in a previous blog, here.

The Decision

The defendant company operated ophthalmic clinics in Kitchener and Cambridge. The plaintiff worked at the Cambridge clinic as an ophthalmic technician and had her hours reduced when the clinic closed. The Company maintained that the closure and reduction in hours was related to the COVID-19 pandemic. Shortly thereafter, the plaintiff began working for another clinic and sued the Company for damages for constructive dismissal.

The Company moved for summary judgement relying on the Regulation, arguing that the plaintiff could not have been constructively dismissed because the reduction in hours was related to COVID-19 and occurred during the COVID-19 period. The plaintiff argued that the regulation deeming her to be on leave, if it did apply to the circumstances, could not be used to avoid her common law claim on the basis of constructive dismissal.

The Court agreed with the plaintiff that the Regulation had no effect on her common law right to claim constructive dismissal. Despite the language of the Regulation, which clearly prevented the finding of constructive dismissal for the purposes of the ESA entitlements, the Court ruled that the Regulation itself was constrained by section 8(1) of the ESA. That section reads, “subject to section 97,[1] no civil remedy of an employee against his or her employer is affected by this Act.”

The Court found support for its view in an online publication from the Ontario Ministry of Labour, Training and Skills Development entitled, “Your Guide to the Employment Standards Act: temporary changes to ESA rules”, which says specifically that the deemed IDEL rules “do not address what constitutes a constructive dismissal at common law.” While not binding on the Court, the guide was found to offer insight into the Ministry’s intention in implementing the regulation in the first place.

After finding the regulation inapplicable to the plaintiff’s common law claim for constructive dismissal, the Court had no trouble finding the reduction in hours to constitute a unilateral lay-off. Because the employer had no contractual right to lay-off the plaintiff, the lay-off amounted to a constructive dismissal. The Court declared that subject to a final determination by the Court of the employer’s just cause defence, which was referred to trial, the plaintiff was entitled to her statutory termination pay (six weeks) since she had fully mitigated her damages.  In doing so, the Court relied on jurisprudence that statutory entitlements are owed regardless of an employee’s mitigation efforts. The award of statutory termination pay is curious (and we believe an error) given the clear language in the Regulation that a layoff does not trigger a constructive dismissal for the purposes of the ESA which means an employee is not entitled to their statutory termination pay.  As this decision was only released on April 27, 2021 it remains to be seen if the employer will appeal the judgment.

Takeaways

While the decision is disappointing for employers, there are almost certainly many others yet to be decided. Whether the reasoning in this case holds given the unique facts of the case remains to be seen. In addition, it is important to note:

  • The Regulation, and therefore this decision, do not apply to unionized workplaces;
  • In many cases, an existing contractual right to implement lay-offs could substantially reduce or even eliminate liability for a constructive dismissal claim;
  • The “COVID-19 period” is in effect until July 3, 2021, but has already been extended once;
  • It may not be too late for employers to update their contracts to include a right to lay-off for some employees, particularly new hires, for any future COVID shutdown periods; and,
  • It remains to be seen if on different facts (for example where an employer was forced to close down under the Emergency Order as a non-essential business and could not conduct business remotely) whether the court would take the same position on liability.

If you have questions about the effect of this decision on your business, concerns about your employment agreements or have any other questions about COVID-19 or other employment issues, the lawyers at CCPartners are available to assist.

Click HERE to access CCPartners’ “Lawyers for Employers” podcasts on important workplace issues and developments in labour and employment law or contact any of our team members to answer you workplace questions.


[1] Section 97 of the ESA bars a civil claim for wrongful dismissal where an employee files an employment standards complaint seeking termination or severance pay. The plaintiff had filed no such claim meaning section 97 was inapplicable to this case.

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