June 10, 2021
by Israel Foulon Wong LLP

Summary

In Taylor v. Hanley Hospitality Inc., 2021 ONSC 3135, the Court held that where an employee is placed on Infectious Disease Emergency Leave (“IDEL”) in accordance with Ont. Reg. 228/20 (“the Regulation”) under Employment Standards Act, 2000 (“the ESA”), an employee cannot claim constructive dismissal under the common law or the ESA. This is in direct contradiction to the finding in Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076 (“Coutinho”), which we previously discussed in our May 10, 2021 Information Bulletin.  In the present case, the Court determined that it was not obligated to follow Coutinho holding that it was wrongly decided.

Taylor v. Hanley Hospitality Inc., 2021 ONSC 3135

On March 27, 2020, Taylor was placed on a temporary layoff from her employment with Hanley Hospitality Inc., operating as Tim Hortons (“Tim Hortons”). Taylor was re-called to work effective September 3, 2020 and had since maintained her employment with Tim Hortons. Taylor claimed that the temporary layoff had resulted in a constructive dismissal at common law. She filed a Statement of Claim alleging that the Regulation did not displace her ability to claim constructive dismissal at common law, but only under the ESA.

Tim Hortons brought a Rule 21 motion to strike the action for failure to disclose a reasonable cause of action. At the hearing, the Court was asked to consider whether the Regulation displaced Taylor’s ability to claim constructive dismissal at common law. The court ruled in favour of Tim Hortons thereby dismissing the employee’s action.

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

The provincial government recently amended the Regulation extending the COVID-19 Period, previously scheduled to end on July 3, 2021, until September 25, 2021.

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 (which is retroactive to March 1, 2020):

• 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 took judicial notice of the significant impact of  COVID-19 on businesses and employees across the province. Noting that hundreds of thousands of Canadians had their employment interrupted as a result of the declared state of emergency, Tim Hortons was required to close all of its storefronts and limit their services to takeout and delivery. In response, the provincial and federal governments took steps to address the impact on individual’s employment by instituting IDEL in order to mitigate the financial burden on businesses.

The Court reviewed and interpreted section 8(1) of the ESA, which states that “no civil remedy of an employee against his or her employer is affected by this Act.” An employee is entitled to elect whether to make a complaint under the ESA or seek redress in the courts, meaning that the ESA is not the exclusive forum to pursue a remedy for claims under the statute. The Court relied on prior case law (Elsegood v. Cambridge Spring Service, 2011 ONCA 831 (“Elsegood”) holding that it is well established that the common law may be displaced by statute. The Court in Elsegood determined that the ESA does not operate independently of the common law, and that if an employee’s employment is found to be terminated under the ESA, the same would be true at common law.

The Court applied the reasoning from Elsegood and determined that the employee was for all purposes on IDEL, not laid off, and not constructively dismissed. The rationale was that an employee cannot reasonably be on a leave of absence under the ESA and yet be constructively dismissed under the common law at the same time. Holding otherwise would lead to an “absurd result.”

The Court noted that the common law is ever changing and that it is necessary for it to evolve. At paragraph 21 (xii) of the decision, the Court stated that:

The Regulation can and did change the common law. Effectively, ‘in these circumstances (COVID), you are not laid off, not constructively dismissed, and you are on a statutory leave of absence.

The Court held that the decision in Coutinho was wrong at law and did not follow a common-sense approach. The correct conclusion, the Court held, was that Taylor was on IDEL and not constructively dismissed for all purposes, as a result of the Regulation.

The decision concludes with the following point (at paragraph 22):

The Ontario Government recognised the inherent unfairness in subjecting employers to wrongful dismissal claims as a result of the government imposing a state of emergency. If they did not take action, these claims would only serve to make the economic crises from the pandemic even worse. It is just common sense.

Take Away for Employers

This decision should come as a welcome relief to some employers who have been subject to the threat of an onslaught of constructive dismissal lawsuits as a result of the lack of clarity on the impact of IDEL and the Coutinho decision.  In this decision, the Court has come down on the side of employers and has found that the provincial government intended to protect employers from liability in these circumstances.

The waters are still muddied as a result of these conflicting decisions, which were both decided at the Ontario Superior Court level.  Both decisions are being appealed.  We expect that before either appeal takes place, additional Superior Court decisions on this issue will be issued.  However, we can certainly hope that the Court of Appeal will ultimately provide definitive guidance shortly.

For the time being, employers may rest a little easier in their decisions to place and/or keep employees on IDEL until September 25, 2021, knowing that there is at least one decision that has held this does not amount to constructive dismissal under common law. After the COVID-19 Period has elapsed, employers will be generally required to recall their employees to the same position held prior to IDEL (or a similar position if the employee’s previous position no longer exists).

We recommend you contact a member of our team in order to determine the best course of action for your workplace if you still have employees on IDEL.

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.