Employees placed on deemed IDEL may be able to claim Constructive Dismissal

The Ontario Superior Court of Justice recently issued a decision that impacts employees who have been placed on the Infectious Disease Emergency Leave (IDEL).

As most of you know, the Ontario government enacted the IDEL Regulation under the Ontario Employment Standards Act, 2000 (“ESA”). This Regulation deems employees whose hours/wages are reduced or eliminated due to COVID-19 to be on IDEL. The Regulation explicitly states that a reduction of hours/ wages due to COVID-19 does not constitute a constructive dismissal. 

 Unfortunately, the court recently held in Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076 that placing an employee on a temporary layoff/IDEL for reasons related to COVID-19 can constitute a constructive dismissal at common law. In other words, if an employer does not have a contractual right to place an employee on a temporary layoff and they were deemed to be on IDEL, the employee can sue for constructive dismissal under common law and claim a termination package. 

In reaching this decision, the court held that section 8 of the ESA provides that no civil remedy is affected by the ESA. As such, the regulation deeming a temporary lay-off for reasons related to COVID-19 to not constitute a constructive dismissal is constrained by section 8 of the ESA. The court stated that it was not possible to reconcile the interpretation of the IDEL Regulation with the spirit of section 8 of the ESA.

 Interestingly, the court also took into consideration the Ministry of Labour’s publication Your Guide to the Employment Standards Act: temporary changes to ESA rules. While the Guide confirmed that a temporary layoff related to COVID-19 would not constitute a constructive dismissal, it went on to state “These rules affect only what constitutes a constructive dismissal under the ESA. These rules do not address what constitutes a constructive dismissal at common law.”

 We are disappointed with this decision and will keep a close eye on any appeal. However, given this recent development, we do anticipate an influx in constructive dismissal claims from employees that have been placed on IDEL/ temporary layoff due to COVID-19. 

If you have any questions regarding this decision and the impact it may have on you, please let us know. There are defences that may be available for employers based on the specific facts of each case, which we would be happy to explore with you.