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May 27, 2021

Ontario’s Infectious Disease Emergency Leave and Constructive Dismissal

By Alex Kagan

On May 29, 2020, the Ontario government enacted Ontario Regulation 228/20: Infectious Disease Emergency Leave, which in practical terms extended the length of time an employee could be temporarily laid off without triggering an automatic termination under the Employment Standards Act, 2000 (the “ESA”). Under the regulation, non-unionized employees whose wages or hours are reduced or eliminated due to COVID-19 are not considered statutorily laid off or constructively dismissed under the ESA. Instead, such employees are deemed to be on job-protected infectious disease emergency leave (“IDEL”).

The regulation was not a permanent change to the ESA, but a temporary measure designed to avoid mass terminations during the pandemic. The regulation only applies to reductions in wages or hours during the statutorily defined “COVID-19 period,” which was intended to expire on September 4, 2020, six weeks after the state of emergency lifted. However, the government extended the COVID-19 period to January 2, 2021, then again to July 3, 2021.

The previous extensions were announced shortly before the COVID-19 period was scheduled to expire. In light of the current status of the pandemic and rising vaccination rates, it is unclear whether the COVID-19 period will be extended yet again. If the Ontario government chooses not to extend it, the maximum timelines for temporary layoffs under the ESA will resume. Specifically, terminations will automatically be triggered for layoffs that exceed 13 weeks in a 20-week period or 35 weeks in a 52-week period (if certain conditions are met).

Employers should therefore review their staffing needs and plans. If the COVID-19 period is not extended beyond July 3, 2021, and employees cannot be recalled due to business conditions, employers will need to contemplate termination decisions as extended temporary layoffs that exceed maximum timelines will be deemed terminations under the ESA.

Constructive Dismissal Implications

Although the enactment of IDEL was welcomed by employers, the regulation only expressly modified the ESA. The question remained whether the regulation impacted constructive dismissal claims under the common law. Under normal circumstances, in the absence of an expressed or implied contractual term permitting a temporary layoff, temporary layoffs may give rise to credible constructive dismissal claims, which would entitle affected employees to full compensation as though they had been dismissed without cause.

A recent Superior Court decision in the case of Coutinho v. Ocular Health Centre Ltd. (“Ocular Health”) is the first instance where a court directly addressed this issue, finding that an employer, having unilaterally leveraged IDEL, did not impact a common law claim for constructive dismissal.

The Ocular Health decision has not yet been interpreted or applied by other courts. The facts were also somewhat unique and involved a “dispute over various corporate and business issues,” which had been ongoing for months prior to the use of IDEL. Moreover, the plaintiff employee in Ocular Health asserted her constructive dismissal claim almost immediately after her pay was suspended, which was prudent. In the event an employee waits several months to assert a constructive dismissal claim, a court may find they have implicitly accepted the layoff and cannot claim that a fundamental term of the employment relationship has been breached.

In summary, Ocular Health represents a setback to employers who leveraged IDEL in order to withstand significant disruptions to their operations during the pandemic. Those employers may be confronted with claims of constructive dismissal under the common law. However, employers may still have a viable defence to such claims based on the contractual terms between the parties, past practice, and the extent to which an employee objected to the layoff in a timely manner.

If you have any questions, please contact a member of our Workplace Law Group.

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