Clarity emerging on COVID-19 leave: shield not sword

Some employers may have taken advantage of a pandemic-related leave meant to shield employees, says Toronto civil litigator Stephany Mandin.

The Infectious Disease Emergency Leave (IDEL) was first enacted in March last year – right after the pandemic took hold and the province went into lockdown – allowing employees to stay home for reasons related to COVID-19 without fear of losing their job.

But regulation amendments enacted soon after meant any employee on reduced hours or temporarily laid off as a result of COVID since the start of the pandemic was deemed to have taken an IDEL, limiting their rights to termination and severance pay.

“I think the intention was to inject some additional flexibility into the system to ward off mass layoffs, but that extra wiggle room also provided an option for certain employers who wished to take advantage,” says Mandin, principal of Mandin Law. “What was meant to be a shield on the one hand for employees has in practice been turned into a sword by some employers.”

Under normal (non-pandemic) circumstances, she explains that temporary layoffs lasting more than 13 weeks generally become terminations under Ontario’s Employment Standards Act if benefits are not continued, triggering termination and severance payments to employees based on their length of service.

Employees whose contracts are silent on the issue of layoffs are also usually able to pursue constructive dismissal claims against employers who unilaterally reduce their hours of work or pay, but the changes to the IDEL temporarily eliminated that route under the ESA if the reduction could be attributed to COVID.

“There are a lot of genuinely good employers who were having a tough time and preferred to invoke the IDEL, rather than fire everybody, but the problem is that there are others who are relying on these provisions to claim that temporary layoffs dating back to the start of the pandemic were COVID-related, when in fact they were not,” Mandin says. “That has placed a whole cohort of employees in a kind of purgatory, and I’ve heard from plenty of laid off workers who don’t think their employers should be getting the benefit of these regulations.”

The regulations are scheduled to expire in July, but Mandin says the legal fallout will last much longer, with the employment law bar still split over the effect of the IDEL on constructive dismissal claims under the common law, in light of the bar on ESA claims for hour and wage reductions.
Employees recently won a major victory in that debate in the case of Coutinho v. Occular Health Centre Ltd., which involved an ophthalmic clinic sued for constructive dismissal by one of its technicians after she was laid off in May 2020.

The employer moved to have the claim summarily dismissed, arguing that the temporary reduction in the worker’s hours fell under the IDEL regulations and did not constitute constructive dismissal.

However, Ontario Superior Court justice David Broad sided with the worker, finding that nothing in the IDEL regulations to prevent a claimant from alleging constructive dismissal under the common law in civil court.

Still, for plaintiffs, confirming your right to claim constructive dismissal is a long way from proving your case. When matters finally make it to trial, Mandin believes each case will turn on the judge’s assessment of the facts, including the employer’s motives and good faith (or lack of it.)

“My gut tells me that courts will be looking at the efforts employers make to be in open communication with employees, their exhaustion of government assistance or other options, and what steps, if any, they took to prevent layoffs from happening,” she says. “Judges will not be impressed with employers using this as a sword, but it’s still going to be a while before the factors are fleshed out for determining what’s a Covid related purpose, as opposed to an ulterior purpose.”