May 10, 2021
by Israel Foulon Wong LLP

Summary

In Coutinho v Ocular Health Centre Ltd., 2021 ONSC 3076, a Superior Court Judge held that Emergency Infectious Disease Leave (IDEL) and the amendments pursuant to Ont. Reg. 228/20 (“the Regulation”) under Employment Standards Act, 2000 (“the ESA”) do not impact an employee’s ability to claim constructive dismissal at common law.

Coutinho v Ocular Health Centre Ltd., 2021 ONSC 3076

Jessica Coutinho (“Coutinho”) was employed by Ocular Health Centre (“Ocular” or “the Clinic”) as the Clinic’s office manager. As of the date of termination she had six (6) years of continuous service and earned approximately $52,000 per year. On May 1, 2020, she was one of several employee’s displaced when the clinic was closed in response to an ongoing business dispute. At the time Ocular continued to provide her with her salary. On May 29, 2020, Ocular placed Coutinho on a temporary layoff and issued a Record of Employment. On June 1, 2020, Coutinho sued alleging constructive dismissal. The Clinic defended the action by alleging that pursuant to the Regulation, a temporary layoff did not amount to constructive dismissal and that the employee was on a job protected leave of absence.

Ocular brought a summary motion seeking to dismiss the employee’s action on the basis that Coutinho had not established a cause of action on the basis that the Regulation, had temporarily removed an employee’s ability to allege constructive dismissal where their hours of work, or pay is reduced in response to COVID-19 during the COVID-19 Period.

Ont. Reg. 228/20 and Infectious Disease Emergency Leave – A Brief Primer

On May 29, 2020, the government of Ontario passed a series of time limited amendments to the ESA. The Regulation addresses temporary changes to the employment relationship that have occurred as a result of COVID-19 and alters the temporary layoff and constructive dismissal provisions under the ESA.  During the COVID-19 Period:

• Where an employer is forced to temporarily reduce or eliminate an employee’s hours of work or wages, the employee is deemed to be on IDEL, a job-protected leave, and is not considered to be on a temporary layoff under the ESA; and

• Temporary reductions in wages or hours worked, for reasons related to COVID-19, are deemed not to be a constructive dismissal under the ESA.

The Court’s Findings

The Court declined to grant Ocular’s motion to dismiss Coutinho’s action, holding that the legislature expressly carved out employees’ right to seek a civil remedy against their employer. Specifically, section 8(1) of the ESA provides that except where an employee has previously raised a complaint under the Act, no civil remedy of an employee against his or her employer is affected by the Act.

Ocular argued that in light of the unprecedented emergency brought on by the global COVID-19 pandemic, the IDEL Regulation should be interpreted to apply to constructive dismissals both under the ESA and at common law. The Court declined to give effect to this argument holding that the intent of statute must transcend and take precedence over the intent of the regulation.  As a result, the Court found that it was impossible to reconcile the interpretation of the  Regulation urged by Ocular with the section of the statute which unequivocally provides that an employee’s civil remedy against their employer shall not be affected by any provision of the ESA.

Additionally, it is well established at common law, that absent an express contractual right, established past practice, or the employee’s consent, an employer is not permitted to unilaterally place an individual on a temporary layoff. As a result, when the employer placed Coutinho on a temporary layoff, it breached the employment agreement and Coutinho was entitled to treat the breach as bringing the contract to an end and sue for constructive dismissal.

Take Away for Employers

Contrary to popular belief, there is no automatic right to temporary layoff except where an employer expressly bargains for it in writing or there is a prior and established past practice.  Otherwise, employers do not have a right to place an employee on a temporary layoff or unpaid leave without their consent. In the present case, the damages were relatively minor because the employee mitigated their loss by finding comparable replacement employment six weeks later. However, under a different set of circumstances, the employee may have been entitled to substantial damages  for payment in lieu of notice.

In order to avoid costly wrongful / constructive dismissal cases, it is important to know what rights you have under the written and express terms of the employment agreement. It is best practice to consult an employment lawyer prior to unilaterally placing an employee on a layoff or temporary leave of absence or unilaterally reducing pay. This is especially important when dealing with longer service employees who may be employed subject to an older outdated contract. The law in this area continues to evolve and as such we strongly recommend that you have your contractual templates reviewed on an annual basis.

Israel Foulon Wong’s Response to COVID-19

Israel Foulon Wong is assessing the situation as it evolves, and is taking all necessary precautions within its workplace. To slow the spread of COVID-19 and for the health of our team and clients, absent extraordinary circumstances we are working remotely until further notice whenever possible. However, please be aware that our offices remain open and are fully functioning. In the circumstances, we encourage our clients to contact us by phone and email to the extent possible. Voicemail messages left at our office phone numbers are immediately forwarded via email. All messages will be promptly responded to. We remain steadfast in our commitment to our clients and would be more than happy to assist you with concerns regarding COVID-19 or any other employment or labour matters.