Covid-19 Related Lay-offs and Constructive Dismissal

man gathering his belongings

In the early days of the COVID-19 pandemic, many employers were forced to temporarily lay-off their employees. In response, the Government of Ontario introduced a regulation that deemed an employee laid-off for COVID-19 reason to be an infectious disease emergency leave (the “IDEL Regulation”). The IDEL Regulation specifically states that reduction of hours or wages for a COVID-19 related reason after March 1, 2020, and until July 30, 2022, is not a constructive dismissal.

In spite of the above Regulations, the Ontario Superior Court of Justice (“OSCJ”) in Coutinho v. Ocular Health Centre Ltd., found that Ms. Coutinho was constructively dismissed following the employer’s unilateral decision to lay her off. The Judge reasoned that IDEL Regulation did not bar Ms. Coutinho from bringing a civil action pursuant to the common law.

In contrast to the Coutinho, the Court in Taylor v. Hanley Hospitality Inc. disagreed with the Coutinho ruling and determined that an employee on IDEL had no right to claim constructive dismissal at common law. The Court reasoned that an employee cannot be lawfully laid-off under employment standards legislation and yet, at the same time, be constructively dismissed under the common law. The Taylor decision was appealed.

The Ontario Court of Appeal’s decision was released recently. However, the Taylor Appeal addresses only the Taylor decision; as a result, the substantive question of whether IDEL precludes an employee from a claim of constructive dismissal at common law remains unresolved.

So what’s next?

The court has not yet ruled out a constructive dismissal claim under common law. In addition, the IDEL Regulations expired on July 30, 2022, and as such, any further lay-offs may be challenged both under the common law and IDEL Regulations.

If you or someone you know has been laid off, you may be able to sue for financial compensation. Please contact our team at JEWELL RADIMISIS JORGE LLP for a free initial consultation.

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