Canadian Employment Law Today

Canadian HR Reporter, 2021 4 A RECENT decision of the Ontario Superior Court could open the floodgates to constructive dismissal claims against employers from employees temporarily laid off as a result of the COVID-19 pandemic. In the early days of the pandemic, many employers were forced to temporarily lay off employees. In response, on May 29, 2020, the Government of Ontario intro - duced a regulation under the province's Employment Standards Act, 2000 (ESA) that deemed an employee laid off for a COVID- 19-related reason to be on infectious disease emergency leave (the IDEL regulation). The IDEL regulation specifically states that a reduction of hours or wages for a COVID-19-related reason from March 1, 2020 to July 3, 2021 (unless further extended by the government) is not a constructive dismissal: "7. (1) The following does not constitute constructive dismissal if it occurred during the COVID-19 period: 1. A temporary reduction or elimina - tion of an employee's hours of work by the employer for reasons related to the designated infectious disease. 2. A temporary reduction in an employee's wages by the employer for reasons related to the designated infectious disease." Despite the IDEL regulation, the ques- tion remained: Could an employee still claim that a layoff or substantial reduction in hours related to COVID-19 constituted a constructive dismissal at common law? According to the recent Ontario court deci - sion, the answer is yes. What happened? Jessica Coutinho was employed with Ocular Health Centre Ltd. as an office manager at one of its two clinics in Ontario. A dispute arose between the principals of Ocular and the doctors practicing out of its Cambridge, Ont., clinic where Coutinho worked. The dispute related, in part, to an allegation that the doctors were not adhering to proper COVID-19 protocols. On May 1, 2020, Ocular closed its Cambridge office. Initially, the company continued to pay Coutinho, but on May 29, it informed her that she would be placed on temporary layoff and recalled as soon as possible. Two days later, on June 1, Coutinho commenced a lawsuit against Ocular, alleging that the temporary layoff consti - tuted a constructive dismissal under the common law and claiming $200,000 in damages. The following month, Coutinho started new employment with the former doctors of the Cambridge clinic. The claim proceeded by way of summary judgment motion, and the court considered two issues: Did the IDEL regu - lation preclude a claim for constructive dismissal at common law, and if not, did the temporary layoff amount to a common law constructive dismissal? The IDEL regulation and the common law Ocular argued that, given the unpreced- ented emergency brought on by COVID-19, the IDEL regulation ought to preclude both statutory and common law constructive dismissal claims — that is, a layoff related to COVID-19 should not constitute a constructive dismissal under either the ESA or common law. This seemed like a reasonable and appropriate approach. The rapid onset of the pandemic caused many businesses to dramatically scale down or close operations with little notice. It therefore seemed fair to both employers and employees that a resulting reduction in an employee's wages or hours, or a layoff, should not auto - matically trigger a termination. The motions judge rejected this argu- ment, concluding that while the IDEL regula- tion precluded an ESA claim of constructive dismissal, it did not affect Coutinho's right to pursue a common law claim for constructive dismissal. Relying on s. 8 of the ESA — which states, "Subject to section 97, no civil remedy of an employee against his or her employer is affected by this Act" — the judge held: "In my view, the scope of s. 7 deeming a temporary layoff for reasons related to COVID-19 to not constitute a constructive dismissal is constrained by s. 8(1) of the ESA. It is not possible to reconcile the inter - pretation of the IDEL regulation urged by Ocular with the section of the statute which unequivocally provides that an employee's civil remedy against her/his [employer] shall not be affected by any provision of the act." The judge also referred to a publication prepared by the Ontario Ministry of Labour, Training and Skills Development, which stated that"these rules affect only what consti - tutes a constructive dismissal under the ESA. These rules do not address what constitutes a constructive dismissal at common law." Was Coutinho's layoff a constructive dismissal? Ocular argued that the layoff did not amount to a constructive dismissal because Coutinho had not inquired whether she might be called back to work before commencing the lawsuit. In other words, Coutinho had jumped the gun in taking the position that she had been dismissed. The motions judge rejected this argu - ment, ruling Coutinho was entitled to treat the unilateral layoff as bringing the employ- ment relationship to an end, and further, that Coutinho did not have any obligation to first inquire whether Ocular might call her back to work. As for damages, Coutinho had fully miti - gated her losses as of July 22, 2020 — less than two months after being laid off. The CASE IN POINT: CONSTRUCTIVE DISMISSAL Many employers have had to take measures to reduce costs during lockdowns as the COVID-19 pandemic marches on. Many provincial governments have passed legislation allowing employers to temporarily lay off employees or cut their pay. However, this doesn't mean employers are free from liability for constructive dismissal, as a recent Ontario court decision has demonstrated. BACKGROUND COVID-19-related temporary layoff a constructive dismissal: Ontario court Ontario ESA separates legislative rights and civil remedies, leaving the door open to common law liability for pandemic emergency leave BY PRIYA SARIN Despite the emergency leave regulation, there was still a question of whether a layoff or reduction in hours related to COVID-19 could be common law constructive dismissal.

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