Controversial COVID-19 leave now divides the bench as well as the bar

The debate over a pandemic-related leave has migrated from the bar to the bench, says Toronto civil litigator Stephany Mandin. 

Ever since the Infectious Disease Emergency Leave (IDEL) was enacted last spring, employment lawyers have been locked in dispute over whether employees laid off under the new law can make claims for constructive dismissal.

The provincial government’s aim when it enacted the law was to allow employees to stay home for reasons related to COVID-19 without fear of losing their job. However, regulation amendments that went into force soon after meant that 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. 

Employers have consistently argued in court that claims under the common law for constructive dismissal are ousted by the new legislation, while employees insist that their common-law rights remain intact.

And in recent months, different judges of the Ontario Superior Court of Justice have delivered rulings to give each side cause to celebrate.

“The discussion that lawyers in the employment bar have been having for the last year is now playing out on the bench, and we’re seeing the same inconsistencies among judges,” says Mandin, principal of Mandin Law.

Under normal circumstances, there would be no such doubts over constructive dismissal claims, because 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. 

The first word from the court on the issue came in a case known 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. But Justice David Broad sided with the worker, finding that nothing in the IDEL regulations prevents a claimant from alleging constructive dismissal under the common law in civil court. 

Soon after, Justice Jane Ferguson’s decision in Taylor v. Hanley Hospitality came out, dealing with a woman temporarily laid off from a Tim Hortons franchise in March 2020. Conducting a statutory interpretation, the judge found that the IDEL regulations had changed the common law as well as the ESA, barring employees from claiming constructive dismissal under either route if the basis for the claim was their placement on the leave.

Until the Court of Appeal is called on to rule decisively on which approach is right, judges will not be bound to follow either decision, so Mandin says we should expect to see both employers and employees pointing the court in the direction of their favoured precedent.  

Still, she says the summary nature of the Taylor ruling, combined with the fact that the Tim Hortons employee did not suggest her layoff was for any other reason than the Covid pandemic, leaves room for future claimants to advance cases, especially if they can raise doubts over the employer’s motives for the layoff.

“Some employers are legitimately using the IDEL to shield employees from the threat of losing their jobs, but there are others who are taking advantage and using it as a sword against workers, by placing them on unpaid leave for reasons that are unrelated to Covid,” Mandin says. “For future claimants, the Taylor decision certainly adds a wrench, but it’s not a blanket stop on claims for common-law constructive dismissal. There’s still the ability for claimants to distinguish their cases on the facts.”

When cases eventually go to trial, she says they will be decided based on the judge’s assessment of the employer’s motives, and whether they acted in good (or bad) faith when they placed employees on IDEL.

“Those credibility issues are now more important than ever,” Mandin adds.