Uncertain Grounds: COVID-19 Related Employment Practices Liability Claims Could Increase Significantly – June 11, 2021

June 11, 2021

Uncertain Grounds: COVID-19 Related Employment Practices Liability Claims Could Increase Significantly – June 11, 2021


By Chris Stribopoulos

Every Canadian province and territory has some form of employment legislation. This legislation sets out the minimum legal requirements that govern the relationship between an employer and an employee. Additionally, employment law is governed by the common law, which generally provides for increased protection to employees. With the onset of COVID-19 and the forced closure of many businesses, it became financially necessary for employers to layoff employees in order to attempt to remain viable as a business. Unless there is a contractual right to layoff an employee, an employee that was laid off would normally be deemed to be constructively dismissed. Such an employee would be able to sue its employer for wrongful dismissal.

In an attempt to address the devastating impact on employers from COVID-19, in May, 2020, the Ontario government enacted the Infectious Disease Emergency Leave Regulations (“IDEL”), and made it retroactive to March 1, 2020. IDEL amended the Ontario Employment Standards Act and removed any constructive dismissal argument where the employer has no contractual right to layoff the employee. Many employers relied on IDEL and laid off employees during COVID-19.

On April 27, 2021, Justice Broad in Coutinho v. Ocular Health-Care Centre Ltd., 2021 ONSC 3076, determined that IDEL does not apply to the common law. As such, the employee was found to have been constructively dismissed when laid off. The court stated:

“…the IDEL Regulation does not affect Coutinho’s right to pursue a civil claim for constructive dismissal against Ocular at common law… s. 7 of the IDEL Regulation may not be interpreted so as to take away an employee’s right of action at common law against his/her employer…“

The impact of the Coutinho decision is that any employer, that laid off an employee during COVID-19 relying upon IDEL, is deemed to have constructively dismissed the employee. Employers will, therefore, be exposed to wrongful dismissal claims brought by their former employees.

In a June 7, 2021 decision by Justice Ferguson in Taylor v. Hanley Hospitality Inc., 2021 ONSC 3135, the court came to the opposite conclusion about IDEL. In Taylor, Justice Ferguson indicated that IDEL was specifically enacted to protect employers in light of the government’s forced closure of businesses due to COVID-19. Accordingly, Justice Ferguson found that it made “common sense” to apply IDEL to the common law to protect employers from wrongful dismissal claims.

Justice Ferguson further noted that it is essential to remember the context in which IDEL was enacted, that being the devastating impact on employers caused by the government’s forced closure of businesses. To expose employers to wrongful dismissal claims in this context would make the economic crisis brought on by COVID-19, even worse.

Take Away

There are now two contradictory decisions in Ontario on the application of IDEL. It is very likely that the Ontario Court of Appeal will hear one, or both of these decisions to provide guidance. The current state of the application of IDEL leaves employers in a very uncertain position, as they try to navigate through COVID-19 and attempt to re-open their businesses in the coming months. If ultimately IDEL does not protect employers, there will be more employment related claims which will result in a significant financial impact to employers at a time when they have already suffered financially. The Taylor decision makes the most sense, as it addresses the intent of IDEL when enacted by the government and protects employers when they were forced to close during COVID-19. Although IDEL is contrary to the established common law and legislation, as stated in Taylor: “exceptional situations call for exceptional measures”.

For further information or if you have any questions about the above article, please contact the author: Chris Stribopoulos, Dolden Wallace Folick Toronto, Email: [email protected]

Cody Mann
Tel: 604 891 0366
Email: [email protected]

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