Is a Lay-off During COVID-19 Still Constructive Dismissal?

In a recent Superior Court of Ontario case between Ms. Coutinho and Ocular Health Care, it was ruled that an employee, who was laid off in May of last year, was constructively dismissed when she was put on temporary lay-off during COVID-19. Within a month, she brought a claim against her employer for constructive dismissal and was successful.

The outcome of this case is very important as it demonstrates that many more employers are now at risk of being sued for constructive dismissal.

To say that many employers having been facing an impossible situation over the last year is an understatement. As businesses lost massive amounts of revenue, many employers have resorted to temporary lay-offs in the hopes of keeping their heads above water during the pandemic. But now, it seems, they may find themselves in legal trouble for constructive dismissal.

When is a lay-off not constructive dismissal?

A constructive dismissal happens when there is a significant unilateral change made by the employer – this can be reduced pay, reduced hours, or temporary lay-off. There is one important exception to this however – and that is in cases where the employer has the right to lay-off the employee because there is a temporary lay-off clause in the employee contract or collective agreement.

This illustrates the benefit of seeking the advice of an employment lawyer when drafting contracts for employees as most lawyers will recommend that employers have just such a clause.

What about IDEL?

Several months into the pandemic, the Ontario Government introduced a support program called the Infectious Disease Emergency Leave (IDEL). It was written into the legislation that employees on this program would not be deemed to be constructively dismissed, but rather considered to be on a leave of absence. That is, it was not considered a constructive dismissal under the Employment Standards Act (ESA), but the regulation did not affect common law.

This caused a lot of confusion – even among lawyers – because it was now unclear as to how the courts might rule on constructive dismissal cases during the COVID-19 pandemic.

However, in the case between Ms. Coutinho and Ocular Health Care, the judge found that IDEL did not prevent Ms. Coutinho from exercising her civil right to sue under the common law. This decision was based on section 97 of the ESA which states that the ESA does not affect an employee’s civil remedy.

What to do about a lay-off during COVID-19

If you are an employee who has experienced a lay-off during COVID-19, it may be a case of constructive dismissal and you may have reason to sue under the common law. If you are an employer who has mistakenly laid off employees during the pandemic and are now facing legal challenges, consult with an employment lawyer as soon as possible. It is important to bring these complaints to a quick resolution.

Please note that this article is for informational purposes only and does not constitute legal advice. If you have questions about your employment rights and responsibilities during COVID-19, our lawyers are here to help. Contact Minken Employment Lawyers today to schedule a consultation.

Sign up for our newsletter to receive up-to-date COVID-19 information, including new legislation and Court decisions impacting your workplace.

Related Topics

• How COVID-19 has shifted employer responsibilities
• Does COVID-19 Extend an Employee’s Reasonable Notice Period?
• New Help for Employers Affected by COVID-19
• 5 Tips for Employers During Lockdown