The Ontario Superior Court of Justice has finally provided an answer to a question that all employment lawyers have been wondering for over a year now: Is a lay off still a constructive dismissal at common law even during the Covid-19 pandemic?
Pre-Covid, it was well established that a layoff was a constructive dismissal at common law, subject to a few exceptions. We now have confirmation from the courts that this remains true even during the pandemic.
Ms. Coutinho commenced employment with Ocular Health Centre (“Ocular”) in 2014. On May 29, 2020, Ms. Coutinho was informed that she was being placed on a temporary layoff. Less than a month later, Ms. Coutinho became re-employed at a new clinic created by the other doctors involved in the initial dispute.
Ms. Coutinho commenced a constructive dismissal claim against Ocular.
Ocular argued that Ms. Coutinho was deemed to be on an emergency leave as a result of a recent Infectious Disease Emergency Leave (“IDEL”) Regulation passed by the Ontario government which stated that layoffs due to Covid did not constitute a constructive dismissal under the Employment Standards Act (the “ESA”).
The Court’s Decision
The motion judge found that the IDEL Regulation did not affect Ms. Coutinho’s right to commence a civil claim for constructive dismissal at common law. This stemmed from section 8(1) of the ESA which clearly states that subject to section 97, an employee’s civil remedy is not affected by the ESA.
The motion judge also relied on an online publication of the Ontario Ministry of Labour which stated “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.”
Accordingly, the well-established principle from the Ontario Court of Appeal decision of Elsegood v. Cambridge Spring Service (2001) Ltd., 2011 ONCA 831 was still applicable in this case: at common law, an employer has no right to lay off an employee and that absent an agreement to the contrary, a unilateral layoff by an employer constitutes a constructive dismissal. Ms. Coutinho was therefore constructively dismissed when she was laid off her employment by Ocular.
The court also ruled that Ms. Coutinho was not obligated to inquire about when she would be recalled to work prior to commencing a claim of constructive dismissal. Rather, she was entitled to treat Ocular’s unilateral layoff as bringing the employment contract to an end and she could immediately sue for constructive dismissal as a result.
Prior to the Covid-19 pandemic, the law was clear that a unilateral layoff by an employer is generally a constructive dismissal although there are some exemptions to this general rule.
However, a lot of confusion resulted back in May 2020 when the Ontario government passed a regulation which confirmed that a layoff was not a constructive dismissal under the ESA. From that point on, there was a debate on whether the regulation also applied to an employee’s common law rights. This case finally provides an answer to this debate: an employee’s common law right to claim constructive dismissal for being laid off is not constrained by the IDEL Regulation.
If you have been laid off because of the Covid-19 pandemic and have any questions about whether your circumstances also constitute a constructive dismissal, please contact us at [email protected] or 647-204-8107 and one of our lawyers would be happy to assist you.