Last month we blogged about the Ontario Superior Court’s decision in Coutinho v. Ocular Health Centre Ltd. (Coutinho) when the court ruled that an employee placed on Ontario’s Infectious Disease Emergency Leave (IDEL), established by O.Reg 228/20 (the Regulation), could still bring an action for constructive dismissal at common law. The plot has thickened with the release this month of a contradictory decision in Taylor v. Hanley Hospitality Inc. (Taylor).
In the Taylor decision, the court considered the same issue – is the employee precluded by the Regulation from bringing a claim for constructive dismissal under the common law, when their hours are reduced or eliminated as a result of the pandemic? While the court in Coutinho concluded no, the court in Taylor has concluded yes.
Where does that leave us? Because these two decisions are from the same level of court, neither has more weight than the other for later judges who might be deciding cases on similar facts. When decisions of the same level conflict, we need a higher court to weigh in – in this case, that would be the Ontario Court of Appeal.
In Taylor, the plaintiff was temporarily laid off starting March 27, 2020, due to the pandemic. As we know, layoffs during this period then converted to IDELs. The plaintiff went back to work on September 2, 2020. She made a claim for constructive dismissal for the period during which she was laid off and not working.
Does the Regulation Bar Constructive Dismissal Claims at Common Law?
Normally, unless the employer has the contractual right to lay the employee off, a layoff will constitute constructive dismissal under the common law. Section 7 of the Regulation states that if an employer temporarily reduces or eliminates an employee’s hours of work or wages for COVID-19 related reasons during the “COVID-19 Period” then this will NOT constitute a constructive dismissal. Just for the record, the COVID-19 Period is now March 1, 2020 to September 25, 2021.
In the Coutinho decision, the court ruled that section 7 of the Regulation did not displace the common law right to assert a constructive dismissal, only the right to do so under the Employment Standards Act, 2000 (ESA).
In Taylor, the court ruled that it does.
The Purpose of the Regulation
In Taylor, the court emphasized the purpose of the Regulation, which was to limit the negative impacts on businesses of the government decision to have them closed. The Regulation converted COVID-19 layoffs into deemed IDELs. The court in Taylor reasoned that therefore the affected employees were no longer on common law layoffs but on an ESA leave – the IDEL. The statutory rights established by the ESA with respect to leaves apply and not the common law with respect to layoffs. The intention of doing this was to negate the very real risk to businesses with respect to laying employees off without the contractual right to do so.
The court in Taylor, therefore, did not allow the plaintiff’s constructive dismissal claim because the court did not see the plaintiff as having been on an illegal temporary layoff but a legal ESA leave.
As noted, this contradicted the decision in Coutinho. The court addressed this conflict directly, stating: “the analysis in Coutinho is wrong in law.”
The Taylor decision is good news for employers who, after Coutinho, had reason to be concerned about a flood of constructive dismissal claims from employees on the IDEL. While neither the Taylor nor the Coutinho decision holds more weight than the other, it’s positive for employers that the law may be going their way and preventing employees from succeeding on these constructive dismissal claims. It remains to be seen if the plaintiff will appeal Taylor and if the Court of Appeal will weigh in.
If you have questions or concerns about employees who have been on a layoff during the Covid-19 Period, get in touch for a consultation.