Labour & Employment Law Blog

A court contradicts an earlier decision: A layoff does not constitute constructive dismissal at common law when implemented for COVID-19 related purposes

A court contradicts an earlier decision: A layoff does not constitute constructive dismissal at common law when implemented for COVID-19 related purposes

Ontario employment law is a dynamic area of practice that is constantly evolving and the COVID-19 pandemic gave this proposition a jolt.

Because the COVID-19 pandemic caused a severe downturn in business for many employers the Ontario government put into law various regulatory changes that classified layoffs (and other changes in employment) as a job-protected leave. The idea was to allow employers some breathing room during this difficult time. A debate then ensued as to whether employees were still free to pursue an action for constructive dismissal under the right circumstances even if they were barred from doing it for the purposes of the Employment Standards Act, 2000 (“ESA”).

Only a few weeks ago we blogged about the decision in Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076 here. In that case the court ruled that the regulatory regime created by the Ontario government did not affect an employee’s right to pursue a civil action for constructive dismissal against an employer at common law even when the employee was laid-off due to the COVID-19 pandemic.

In the new case of Taylor v. Hanley Hospitality Inc., 2021 ONSC 3135 a different judge specifically rejected the ruling in Coutinho holding that the government’s regulations displaced the common law. This means that the most recent decision in Taylor would bar employees from asserting constructive dismissal under the regulatory regime not only for the purposes of the ESA but the common law also.

Our Thoughts

Ignorance is not bliss and at the present we have two diametrically divergent decisions as to the state of layoff law in Ontario. Practically speaking, at this point the issue will remain unresolved until the matter is decided by the Ontario Court of Appeal. For the present it’s 1:1 for employers and employees.

The above article is for general information purposes only, does not constitute legal advice or create a solicitor-client relationship. Because each case is unique and factually driven, if you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere. We represent clients in the Greater Toronto Area including Toronto, North York, Markham, Vaughan, Thornhill, Newmarket, Aurora, Brampton, Mississauga, Barrie, Ajax, Whitby, Pickering and Oshawa.