CASE LAW ALERT: Courts Continue to Interpret Temporary Layoffs and Constructive Dismissal

In late May 2020, the government introduced regulations converting temporary layoffs of non-union employees into unpaid infectious disease leaves under the Employment Standards Act(ESA). The duration of this relief has been repeatedly extended. This regulatory relief is particularly important for employers who normally cannot impose a temporary layoff on an employee (absent a contractual agreement to that effect) without the risk of an employee claiming constructive dismissal and entitlements to statutory and common law termination entitlements.

PooranLaw has been monitoring recent decisions related to non-disciplinary dismissal and the uncertainty of the Government’s layoff relief. Specifically, the question remains whether it protects employers from common law constructive dismissal claims. The prior default saw that putting an employee on a layoff where an employer failed to contract for the right to do so was grounds for constructive dismissal and termination damages.

Three recent decisions have added to the confusion.

  1. In Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076 the court held that employers were not protected since the ESA layoff relief did not apply to limit an employee’s right to claim common law constructive dismissal.
  2. Subsequently, the court in Taylor v. Hanley Hospitality Inc., 2021 ONSC 3135 came to the opposite conclusion, holding that employers were indeed protected from constructive dismissal in this context.
  3. These two contradictory decisions from the lower court have been further complicated by Fogelman v IFG., 2021 ONSC 4042 (“Fogelman”), where the Court held that where an employee is placed on IDEL in accordance with Ont. Reg. 228/20 under the ESAan employee can claim constructive dismissal at common law. Punitive damages where the employer didn’t pay out ESA minimums because they thought the layoff relief protected them was also paid.

At present it is still unclear as to whether placing an employee on IDEL amounts to constructive dismissal at common law because of these contradictory decisions, meaning that the Ontario Court of Appeal will likely have to provide clear guidance on this issue.

PooranLaw will continue to monitor legal developments related to the non-disciplinary dismissal. In the meantime, if you require legal assistance in determining how these new rules apply to you or your organization, we encourage you to reach out to your regular PooranLaw lawyer, or any member of our team.

Note: This article provides general information only and does not constitute, and should not be relied upon as, legal advice or opinion. PooranLaw Professional Corporation holds the copyright to this article and the article and its contents may not be copied or reproduced in any form, in whole or in part, without the express permission of PooranLaw Professional Corporation.