As a result of the COVID pandemic, the government of Ontario modified the Employment Standards Act (ESA) to create a new form of leave, being the “Infectious Disease Emergency Leave”. The new regulations exempted employees who were temporarily laid off for reasons related to COVID, from eligibility to termination and severance pay. Instead, temporarily laid off employees were deemed to be on the Infectious Disease Emergency Leave and would not be considered to have been constructively dismissed. For further discussion regarding the Infectious Disease Emergency Leave, please refer to our blog: “Laid Off During COVID: what are my rights?”.
Prior to these ESA changes, employees who were temporarily laid off had two options. First, employees could wait for 13 weeks, or 35 weeks in some cases, and if they were not recalled by their employer, employees were entitled to termination pay, and severance pay, where applicable. Second, at common law, employees did not have to wait for 13 weeks, or 35 weeks, as the case may be, but instead could choose to make a civil claim for pay in lieu of reasonable notice. As a result of the new regulations, employees no longer have the first option. While the new regulations are in place, employees can now be laid off in excess of the 13 or 35 weeks, and employers do not have to pay termination or severance pay, as long as the reason for the lay off was related to COVID. However, many wondered whether the new ESA rules would affect employees’ right, at common law, being the second option, to make a wrongful or constructive dismissal claim, seeking pay in lieu of reasonable notice where the employee was temporarily laid off during the COVID pandemic.
The Superior Court of Justice, in Coutinho v. Ocular Health Centre Ltd., has recently held that, despite the changes to the ESA, employees’ rights under the common law are unaffected, and they may still bring a claim for pay in lieu of reasonable notice.
In the Coutinho case, the employer argued that, given the unprecedented nature of the COVID pandemic, and its effect on workplaces, the new ESA regulations, should be interpreted to apply to temporary layoffs under the ESA, as well as the common law. However, the Court rejected this proposition on two grounds; first, the provisions of the ESA, specifically, section 8(1), state that “no civil remedy of an employee against his or her employer is affected by this Act [the ESA]”; and second, the Court relied on extrinsic evidence, being the Ministry of Labour’s guide to the new ESA regulations, which specifically indicated that the rules only affect what constitutes a constructive dismissal under the ESA, and not the common law. While the latter was not a binding authority, the Court relied on it to assist in the interpretation of the Ministry of Labour’s intention when enacting the new ESA regulations.
As a result, the Court in Coutinho refused the employer’s assertion that the ESA provisions should extend to the common law due to the extraordinary circumstances regarding the COVID pandemic. Instead, the Court upheld the well-established principle that, absent an agreement to the contrary, the employer cannot unilaterally lay off an employee, and doing so would constitute a substantial change in the employment which amounts to a constructive dismissal.
As more cases are heard by the Courts, regarding employment issues arising during, and because of, the COVID pandemic, employees will be better informed regarding their rights where their jobs may have been affected during this time. As lawyers with expertise in employment law, we continue to advise our clients regarding their ability to pursue a claim where their employment was terminated or substantially changed as a result of COVID. You may contact us at any time with your questions.