COVID-19 Temporary Layoffs May Constitute Constructive Dismissal at Common Law

On April 27, 2021, the Ontario Superior Court issued its decision in Coutinho v Ocular Health Centre Ltd., 2021 ONSC 3076 (“Ocular Health”), which appears to be the first reported case to consider Ontario Regulation 288/20, the Infectious Disease Emergency Leave Regulation (the “IDEL Regulation”). The Court held that the IDEL Regulation does not affect an employee’s right to pursue a civil claim for constructive dismissal at common law.

By way of background, on May 29, 2020, the Ontario Government enacted the IDEL Regulation under the Employment Standards Act, 2000 (the “ESA”) in response to the COVID-19 pandemic. During the “COVID-19 period” (March 1, 2020 until at least July 3, 2021), a non-unionized employee is “deemed” to be on a job-protected Infectious Disease Emergency Leave where their employer has temporarily reduced or eliminated their hours of work because of COVID-19. Subsection 7(1) of the IDEL Regulation expressly states that a reduction or elimination of hours of work in such circumstances will not constitute constructive dismissal. (The ESA provides that constructively dismissed employees are entitled to notice of termination, or pay in lieu thereof, and severance pay, if applicable). 

The Facts

The employer, Ocular Health Centre Ltd. (“Ocular Health”), operated ophthalmic clinics. The plaintiff was employed by Ocular Health as an office manager in one of its clinics. 

When the plaintiff attended work on May 1, 2020, she was denied entry to the premises. The plaintiff was later advised that the office was closed, and she was being placed on temporary layoff.

On June 1, 2020, the plaintiff brought an action against Ocular Health seeking damages for constructive dismissal. 

The employer took the position that the plaintiff’s hours of work were eliminated for reasons related to COVID-19 and she was therefore deemed to be on Infectious Disease Emergency Leave pursuant to the IDEL Regulation. The employer brought a motion for summary judgment seeking dismissal of the action on the basis that, accordingly, the plaintiff had no cause of action against Ocular Health and there was no genuine issue requiring a trial. 

The plaintiff argued that the reasons for the elimination of her hours of work were not related to COVID-19. She also argued that the IDEL Regulation did not affect her common law right to pursue a civil claim against Ocular Health for constructive dismissal.

The Decision

At common law, unless an employment contract expressly permits an employer to lay off an employee, a unilateral layoff by an employer is considered a substantial change in employment and would typically constitute a constructive dismissal. 

The employer argued that, given the unprecedented emergency brought on by the global COVID-19 pandemic and the severity of its impact on employers and employees in Ontario, subsection 7(1) of the IDEL Regulation ought to be interpreted to apply not only to constructive dismissals for the purposes of the ESA, but also at common law. 

The Court held that the IDEL Regulation did not affect the plaintiff’s common law right to pursue a civil claim for constructive dismissal¸ citing subsection 8(1) of the ESA, which generally provides that no civil remedy against an employer is affected by the ESA.  (Accordingly, it was unnecessary for the Court to determine whether the reasons for the elimination of the plaintiff’s hours of work were related to COVID-19).  

The Court also reviewed an online publication of the Ontario Ministry of Labour, Training and Skills Development (the “Ministry”), entitled “Your Guide to the Employment Standards Act: temporary changes to ESA rules” (the “Ministry Guide”) as extrinsic evidence to aid in interpreting the IDEL Regulation. The Ministry Guide states: "These rules affect only what constitutes a constructive dismissal under the ESA. These rules do not address what constitutes a constructive dismissal at common law."

Although the Ministry Guide was not binding on the Court, the Court’s view was that the Ministry Guide offered insight into the Ministry’s intention in enacting the IDEL Regulation provisions respecting constructive dismissal. 

Accordingly, the Court dismissed the employer’s motion for summary dismissal.

Significance

Ocular Health provides a definitive statement from an Ontario Court that layoffs can still constitute constructive dismissal under the common law, even if the layoffs were for reasons related to COVID-19. Given the widespread layoffs that have occurred in Ontario workplaces over the past year, this case and its potential implications are of great significance for employers.

It remains to be seen whether the Ocular Health case will be appealed and/or whether it will be followed in future cases. We will continue to monitor any developments and provide further updates as information becomes available.

For advice specific to your situation, consider contacting your regular lawyer at Rae Christen Jeffries LLP.

alexandra

Alexandra Jamieson