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IDEL Regulation Not Applicable Where An Employee Was Laid Off Prior To May 29, 2020 And Resigns Within Reasonable Period Says SCC

Practice Areas: Human Resources Support

In a recent Small Claims Court decision, Wilkinson v Pharma, 2022 CanLII 120475 (ON SCSM), the Court determined that the IDEL regulation did not apply where an employee was temporarily laid-off on May 18, 2020 as result of the Covid-19 pandemic.

The employee commenced employment with the Company on July 3, 2017 as a Business Development Manager. On March 25, 2020, the Company advised the employee that it was temporarily reducing her hours of work to two days per week as a result of the Covid-19 pandemic. On April 21, 2020, the Company advised the plaintiff that her work schedule would be increased to three days per week. On May 14, 2020, the Company advised the employee that she would be placed on a temporary layoff due to the Covid-19 pandemic effective May 18, 2020.

The employee accepted an offer of employment with a new company on June 17, 2020, and advised the Company on June 26, 2020 of her resignation. At the time of her resignation, the employee was 39 years old and had completed three years of service with the Company. The employee then brought an action against the Company for constructive dismissal.

The Court found that the employee was constructively dismissed because there was no express or implied term in the employee’s employment contract which would allow the Company to temporarily layoff the employee. Furthermore, the employee did not consent to the temporary layoff. The Court found that May 18, 2020 was the effective date of the employee’s constructive dismissal.

Interestingly, the Court determined that the IDEL regulation did not apply to the employee’s layoff because she was laid off prior to May 29, 2020 as per the operation of s.7(2) of the IDEL regulation. Section 7 of the IDEL Regulation provides:

(1) The following does not constitute constructive dismissal if it occurred during the COVID-19 period:

1. A temporary reduction or elimination of an employee’s hours of work by the employer for reasons related to the designated infectious disease.

2. A temporary reduction in an employee’s wages by the employer for reasons related to the designated infectious disease.

(2) Subsection (1) does not apply to an employee whose employment was terminated under clause 56 (1) (b) of the Act … before May 29, 2020.

Section 56 (1)(b) of the ESA reads as follows:

An employer terminates the employment of an employee for purposes of section 54 if,

the employer constructively dismisses the employee and the employee resigns from his or her employment in response to that within a reasonable period; or

The Court determined that the employee resigned within a reasonable period of the constructive dismissal (May 18, 2020) as required by section 56(1)(b) of the Employment Standards Act, 2000. The Court also concluded that the IDEL regulation does not apply because the effective date of the constructive dismissal occurred before May 29, 2020. The Court declined to further address whether the IDEL regulation affects all common law actions for wrongful dismissal.

Ultimately, the Court awarded the employee three months’ (13 weeks’) notice based on the Bardal factors. The employee agreed to forgo any compensation before June 29, 2020, and the employee was not compensated for this period (6 weeks). The Court calculated the amounts the employee would have earned in the remaining 7 weeks of the notice period and then deducted the amounts received from the new employer in arriving at the total damages owed to the employee.

Key Takeaways

The Court’s interpretation of s. 7(2) of the IDEL regulation adds an additional hurdle for employers who relied on the IDEL regulation to temporarily lay off workers during the Covid-19 pandemic and who may be currently in litigation for constructive dismissal claims as a result. Although section 7(1) of the IDEL regulation explicitly allows for the “… elimination of an employee’s hours of work by the employer for reasons related to the designated infectious disease” the Courts interpretation of s.7(2) indicates that the IDEL regulation does not apply where the employee was laid off before May 29, 2020 and the employee resigned within a reasonable time following the layoff.

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.



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