Constructive Dismissal and the IDEL
Photo by Kelly Sikkema on Unsplash

At long last, the impact of Ontario’s Infectious Disease Emergency Leave (IDEL) on employee constructive dismissal claims has been litigated. Employment lawyers have been speculating for a long while about how courts will treat the various employment pivots employers were required to make during the pandemic. We now have our first answer. 

Last week, the Ontario Superior Court of Justice released its decision in Coutinho v. Ocular Health Centre Ltd. and ruled that the IDEL does not take away an employee’s ability to sue for constructive dismissal. 

What’s Constructive Dismissal?

A constructive dismissal occurs when an employer unilaterally and substantially changes an express or implied term of the employee’s contract. The term also needs to have been essential. Changes regarding pay, duties, hours of work etc., can all potentially be constructive dismissals. 

In the case of the pandemic, many employers had to cut their employees’ hours and/or pay. As was the case in the Coutinho decision, the employer stopped paying the employee altogether, placing her on a layoff. 

An employer can only lay an employee off without risking constructive dismissal where they have the employee’s agreement to do so.

What’s the IDEL Got to do With It?

The Ontario government attempted to mitigate the risk that employers would get hit with constructive dismissal claims arising from their need to shut down by introducing the IDEL. 

  1. Reg. 228/20, which legislated the IDEL, establishes that there is no constructive dismissal under the Employment Standards Act (“ESA”) where an employee’s wages or hours of work are temporarily reduced or temporarily eliminated by their employer for reasons related to COVID-19 from March 1, 2020, to July 3, 2021.

 The Coutinho decision establishes that the above protections are against constructive dismissal under the ESA ONLY. Employees may still bring constructive dismissal claims under the common law. 

But My Employees Agreed!

In order to be successful in their constructive dismissal claims, employees needed to have objected to the changes made to their employment. In many cases, this may not have happened. Employees may have explicitly agreed to be laid off, or to work for less money, or they may have acquiesced to the changes by just continuing to work and not raising objections. In the Coutinho case, the employee objected to her lay off right away.

If your employees agreed to changes necessitated by Covid, they may not have good constructive dismissal claims. 

If you have questions about the risk of constructive dismissal claims from your employees, or general questions about how to manage your evolving business needs during the pandemic, get in touch for a consultation!