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The Taylor Appeal: No Clarity from Court of Appeal on Question of Intersection of ESA and Common Law Rights Under the IDEL Amendments

In 2020, the global COVID-19 pandemic unexpectedly changed the lives of many employers and employees. During this time period, employers needed to find ways to support their employees, but also find ways to effectively run their own business. In Taylor v. Hanley Hospitality Inc., 2021 ONSC 3135 (“Taylor”) a similar situation arose (we previously wrote about it here). The employee was placed on a temporary layoff as a result of the Emergency Orders implemented on March 27, 2020. The Ontario government introduced the Infectious Disease Emergency Leave (IDEL), giving employees an unpaid but job-protected leave of absence under the Employment Standards Act, 2000 if their hours of work were reduced or eliminated due to COVID-19. However, there was still debate regarding whether such a COVID-based temporary layoff constituted a constructive dismissal pursuant to the common law.

In Taylor, Hanley Hospitality Inc., who operates a Tim Horton’s restaurant, was successful with a Rule 21 motion (a procedural method under the Rules of Civil Procedure to determine an issue before trial in the hope of either streamlining the trial or eliminating the need for trial altogether).  The Ontario Superior Court of Justice declared that the temporary layoff did not constitute constructive dismissal. Specifically, Justice Ferguson stated the following in paragraph 22:

[22] I agree with Tim Hortons [Hanley Hospitality Inc.] that exceptional situations call for exceptional measures. 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 plaintiff’s action is dismissed.

Taylor appealed this decision at the Ontario Court of Appeal (“ONCA”).  In light of several conflicting lower court decisions on this question, employment lawyers across Ontario were on the edge of our collective seats, awaiting the Court of Appeal’s answer on this very important question.  Alas, it was not to be.  At least not quite…

Justice Roberts, writing for the Court of Appeal, overturned the decision on the basis that a Rule 21 motion was not appropriate in this scenario. The reason: there were issues of material fact in dispute between the parties that required an answer.  As opposed to being asked to determine a strict question of law, as is the proper application of Rule 21, Hanley Hospitality Inc. was in effect seeking to use Rule 21 for Summary Judgment but without actual evidence (of which there was none properly before the Court). This was not an appropriate case for a Rule 21 motion.

While all of this “procedural wrangling” is interesting and instructive in terms of strategic considerations for employers facing wrongful dismissal lawsuits, the important part to note for employers more broadly is: although the Court overturned Taylor it declined to pronounce on whether, in fact, an employee being placed on IDEL as permitted by the ESA could constitute constructive dismissal.

Specifically, Justice Roberts stated at paragraph 4:

[4] The following reasons explain why I am of the view that the motion judge erred in deciding the case under rule 21 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, and why I would allow the appeal on that basis. Because of the view I take on that matter, it is inappropriate to rule on the issue of whether the amendments to the ESA and associated regulation affect common law rights.

Essentially, the Court of Appeal decided in the instant case that this question could not be accurately answered since the motion judge’s analysis was based without facts.

So then, what is the answer to the question previously posed? Is temporary layoff due to COVID-19 restrictions considered a constructive dismissal or a valid circumstance as per the ESA that acts as an exception for employers during the global pandemic?  This remains to be seen, but we will of course continue to monitor not only Taylor, but other cases that come to light dealing with this important issue.  In the interim, don’t hesitate to contact the team at CCPartners if you are dealing with allegations of constructive dismissal under IDEL or otherwise.

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