Ontario courts disagree on IDEL and constructive dismissal

Who got it right? We still don’t know

Ontario courts disagree on IDEL and constructive dismissal
Brittany Taylor

Less than two months after the Ontario Superior Court of Justice released its decision in Coutinho v Ocular Health Centre Ltd. and confirmed that an employee who was unilaterally placed on Infectious Disease Emergency Leave (IDEL) had been constructively dismissed, a new decision from that same court has reached the opposite conclusion.

When we wrote about Coutinho, we anticipated that there would be further litigation on this issue and that it was far from settled. Unfortunately, that prediction has turned out to be painfully accurate, and the resulting inconsistency has left parties on both sides of this issue stymied for the time being.

Like many employees, the plaintiff in Taylor v Hanley Hospitality Inc. had been laid off from her employment in March of 2020. Candace Taylor was recalled to work in September, and at the time the motion was heard, was still working for the employer, Hanley Hospitality operating as Tim Hortons. She brought a claim against her employer alleging that the temporary layoff amounted to a constructive dismissal of her employment.

The employer argued that it had been required by the Ontario government to close all its storefronts, and one store entirely, and it was left with no choice but to lay off over 50 employees, including Taylor.

The employer brought a motion for summary judgment and asked the court to determine whether placing an employee on IDEL in these circumstances would constitute constructive dismissal.

The court’s analysis

Justice Ferguson found that when the Ontario government amended the Employment Standards Act, 2000 to state that all layoffs related to COVID-19 were deemed to be IDELs retroactive to March 1, 2020, this resulted in a change both to the act and to the common law. In other words, Taylor had not been laid off in March 2020 ─ she had simply been placed on a leave of absence due to COVID-19.

As the act provides that an employer may direct an employee to go on IDEL, as the employer did in this case, there was no basis for Taylor to argue that she had been constructively dismissed.

As a result, the court found that Taylor was not constructively dismissed, but had been lawfully placed on IDEL by her employer.

Why the court declined to follow Coutinho

The decision in Coutinho had not been released at the time the motion for summary judgment was heard, but the court allowed additional submissions from the parties after the fact to account for the new case. In declining to follow Coutinho, the court noted that doing so would render the Ontario government’s changes to the act “meaningless” and from a position of pure statutory interpretation, that would be nonsensical.

In Coutinho, the court noted that Section 8(1) of the act expressly states that an employee’s civil rights are not impacted by any provisions of the act, and concluded that, as a result, changes to the act cannot displace an employee’s common law rights. This analysis appeared to be supported by the Ministry of Labour’s own guidance on this issue, which confirmed that the act had no impact on an employee’s claim for constructive dismissal at common law.

However, the court in Taylor held that this would create an “absurd result” whereby an employee could be on a leave of absence for purposes of the act, but terminated by constructive dismissal for common law purposes. The court interpreted Section 8(1) to mean only that the act does not “set out an exclusive forum for addressing matters set out in the act” and that an employee has the freedom to pursue a complaint under the act or seek redress from the courts.

The court pointed out that we have at least one decision from the Ontario Court of Appeal (Elsegood v Cambridge Spring Service) which confirms that the common law does not operate independently of the act. Further, there have been no decisions before Coutinho which have gone so far as to say that Section 8(1) prevents the act from displacing the common law.

The court noted that the common law “evolves as the changing times make it necessary to do so”. In that regard, the court found that Coutinho failed to properly consider that IDEL was created by the legislature in response to very challenging and unique circumstances which it, in part, created ─ particularly in this case, where the employer was forced to cease or significantly curtail its operations by the Ontario government. Interpreting IDEL to apply only to claims under the act would entirely nullify the protection that the legislature had granted to employers in this situation.

In conclusion, the court made the following comments:

“I agree with [the employer] that exceptional situations call for exceptional measures. The Ontario government recognized 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 crisis from the pandemic even worse. It is just common sense.”

Who got it right?

Unfortunately, we won’t know the answer to this question for some time. Coutinho has sought leave to appeal from the Divisional Court, as the decision in Coutinho did not finally resolve the matter (it has been sent back to trial to determine the appropriate reasonable notice period).

An appeal in Taylor would be heard by the Ontario Court of Appeal. Ultimately, even these decisions may not give us finality on this issue, and we may have to wait for the Supreme Court of Canada to weigh in.

In the meantime, these conflicting decisions unfortunately leave parties on both sides of this issue in a state of uncertainty. Coutinho was a win for employees, and Taylor is a win for employers. But we do not have clear direction yet, and parties in circumstances like these two cases, of which there are many, may have to “roll the dice.”

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