What Ontario Employers Need to Know After the Court of Appeal Provides No Resolution?

The issue in the case was whether placing an employee on an Infectious Disease Emergency Leave (IDEL) amounted to a constructive dismissal at common law.  Constructive dismissal is when an employer does not formally terminate an employee, instead the employer’s acts demonstrate a likely intent not to continue to employ or honour the terms of the employment with the employee. The Ontario government passed IDEL provision to provide job-protected leave if employers had to temporarily lay-off employee due to Covid-19 and result in shutdowns of businesses. The question becomes whether the IDEL provision kicks out the common law presumption that temporary layoff may give rise for an employee to claim a constructive dismissal.

In the case, Coutinho and Ocular Health that was decided in 2021 found an employee may claim constructive dismissal when laid off and this would apply to the IDEL provision. 

Before Covid-19, if an employment agreement had a provision stating that an employer can temporarily layoff employees, the Ontario Employment Standard Act temporary layoff provisions did not apply. The presumption is that employees cannot be laid off and if they are a claim for constructive dismissal can be made. The presumption would not apply to sectors that involve something like seasonal work.

So what does this mean for employers? Has anything changed? 

Since, we are left with two conflicting court decisions it is probably prudent for employers to consider implementing provisions that protect them against liability. Employers with current employment contracts and those who have no contracts in place may seriously want to consider adding provisions that use language that allows for temporary layoffs. 

The Court of Appeal’s decision has given further reason for employers to consider getting their employees back to work to minimize the risk of liability, especially if the pandemic is not impacting their businesses. 

Employers do not want to face the costs of litigation because they run the risk of having unresolved results. While employees are left wondering if they should even go to trial.

In the end, until we have an outcome from the next decision most employers may face the risk of constructive dismissal claims from employees that have been temporarily laid off.