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Temporary Layoff Considered Constructive Dismissal at Common Law

Almost a year after the Ontario government enacted Ontario Regulation 228/20 – the Infectious Disease Emergency Leave (“IDEL”) under the Employment Standards Act, 2000, S.O. 2000, c.41, the Ontario Superior Court has found that employees who have been temporarily laid off due to a reason related to COVID-19, are able to bring a civil action for constructive dismissal under common law.

While the Ontario Regulation 228/20 (“Regulation”) provided some flexibility for employer’s to make changes to their employee’s working hours and wages, the Regulation did not address the employee’s right to sue for constructive dismissal at common law.

In Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076, the Ontario Superior Court considered this scenario for the first time, and determined that the Regulation does not prevent an employee who was temporarily laid off due to a reason related to COVID-19, to bring a civil action under common law. In particular, section 8(1) of the Employment Standards Act, 2000 provides that “no civil remedy of an employee against his or her employer is affected by this Act.”

What Does This Mean for Employers?

While many employment relationships are governed by an employment agreement between the employee and employer, not all employment agreements effectively limit the employee’s entitlements to the ESA once they have been dismissed, or even allow for a temporary layoff as per the ESA. As such, if an employment agreement does not include a provision limiting the employee’s entitlements to the ESA, this opens the door to possible constructive dismissal claims at common law.

Considering the high number of temporary layoffs that occurred since the beginning of the COVID-19 pandemic, it remains to be seen whether this case will result in a flood of similar claims from employees who were laid off during this period. Employers should consider a revision of their employment agreements to ensure that they are limiting liability when it comes to claims of constructive dismissals as a result of temporary layoffs.

Contact Us 

If you are an employer facing a constructive dismissal claim or require a revision of your employment agreement, or an employee who has been laid off or otherwise constructively dismissed, our team of experienced workplace lawyers at Achkar Law can help. Contact us by phone toll-free at +1 (800) 771-7882 or email us at [email protected] and we would be happy to assist.