Is Placing an Employee on the Infectious Disease Emergency Leave a Constructive Dismissal? The debate continues…

  • July 13, 2021
  • Paul Schwartzman and Benjamin Zolf, Brauti Thorning LLP

OVERVIEW

In decisions released less than two months apart, the Ontario Superior Court has issued conflicting judgments on whether placing an employee on an Infectious Disease Emergency Leave (“IDEL”) can amount to a constructive dismissal at common law. Section 7 of Ontario Regulation 228/20 (“O. Reg. 228/20” or “the Regulation”) passed under the Employment Standards Act, 2000 (the “ESA”) provides that a temporary reduction or outright elimination of hours and/or wages for reasons related to COVID-19 during the COVID-19 period is neither a layoff nor a constructive dismissal.[1] The Regulation has the effect of suspending the notion of a layoff and instead substituting it with a deemed IDEL, being an unpaid leave of absence for the duration of the “COVID-19 period.”  For the purpose of section 7, the COVID-19 period is the period beginning on March 1, 2020 and currently scheduled to end on September 25, 2021.

BEING PLACED ON AN IDEL IS A CONSTRUCTIVE DISMISSAL

The first of the conflicting decisions – Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076 (“Coutinho”) – was released on April 27, 2021. In this case, the office manager of an ophthalmic clinic was told not to return to work in May of 2020 in the wake of a business disagreement between the principals of the clinic and its doctors. The Defendant brought a motion for summary judgment, seeking a dismissal of the action in reliance on O. Reg. 228/20 and specifically the statements in the legislation that placing an employee on IDEL did not amount to a constructive dismissal. 

The Court found that O. Reg. 228/20 had no impact on an employee’s common law claim for constructive dismissal as a result of being placed on a layoff (and consequently, being placed on an IDEL), finding that unless there were contractual terms which allowed the employer to lay off the employee or if the employee consented to the layoff, the unilateral imposition of a layoff without pay amounted to a constructive dismissal.  In coming to this decision, the Court found that the scope of O. Reg. 228/20 is limited by section 8(1) of the ESA, which provides that: “Subject to section 97, no civil remedy of an employee against his or her employer is affected by this Act,” and that it was not possible to reconcile section 8(1) of the ESA with the Defendant’s legal position. The Court also relied on the Ministry of Labour’s publication on the Regulation which explicitly stated “These rules affect only what constitutes a constructive dismissal under the ESA.  These rules do not address a constructive dismissal at common law.”[2]