IDEL – Constructive Dismissal or Not? Ontario Courts Remain Undecided

As the COVID-19 pandemic continues, Ontario courts have grappled with the challenging question of whether infectious disease emergency leave (IDEL) constitutes constructive dismissal.

The Ontario government amended the ESA on May 29, 2020 by introducing O. Reg 228/20, often referred to as the IDEL regulation. In addition to providing protection to employees who require leave for pandemic-related reasons, this regulation also provides employers impacted by the pandemic with temporary relief from the regular ESA rules regarding temporary layoffs and constructive dismissal. The regulation permits employers to temporarily reduce or eliminate a non-unionized employee’s hours of work and/or or temporarily reduce an employee’s wages, for reasons related to COVID-19 without these measures constituting constructive dismissal.

Since the regulation’s introduction, the Ontario Superior Court was asked to consider how this regulation interacts with common law principles pertaining to constructive dismissal on three separate occasions. The Court reached disparate results on each of these occasions, leaving the law on this topic unsettled.

The initial case law ruled that IDEL can constitute constructive dismissal under common law.

The Ontario Superior Court first considered whether the IDEL regulation precludes employees placed on IDEL from advancing a common law constructive dismissal claim in Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076. In this significant April 2021 decision, the Court held that while the regulation precludes employees placed on IDEL leave from pursuing constructive dismissal claims under the ESA, that the regulation does not affect these employees’ rights to pursue civil constructive dismissal claims under the common law.

In reaching this decision, the Court reasoned that the IDEL regulation’s application was constrained by s. 8(1) of the ESA, its enabling legislation. Section 8(1) of the ESA states, “no civil remedy of an employee against his or her employer is affected by this Act.” In relying on this provision of the ESA, the Court held that:

[42] …The scope of the regulation is constrained by its enabling legislation.
Thus, one cannot simply interpret a regulation the same way one would a
statutory provision.

[43] In my view, the scope of s. 7 deeming a temporary lay-off for
reasons related to COVID-19 to not constitute a constructive dismissal is
constrained by s. 8(1) of the ESA. It is not possible to reconcile the
interpretation of the IDEL Regulation urged by Ocular with the section of the
statute which unequivocally provides that an employee’s civil remedy against
her/his employee shall not be affected by any provision of the Act.

[44] The fact that 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 her/
his employer for constructive dismissal is reinforced by the online publication
of the Ontario Ministry of Labour…

This line of reasoning was supported in Fogelman v. IFG, 2021 ONSC 4042, which was released a month later. In Fogelman, the Court similarly held that the IDEL regulation only precluded IDEL from constituting constructive dismissal under the ESA, not under the common law. In line with Coutinho, Fogelman ruled that the IDEL regulation did not address what constitutes a constructive dismissal at common law, and thus did not interfere with principles of common law constructive dismissal.

The Court adopts a different in Taylor v. Hanley Hospitality

Just over a month after Coutinho was decided and a few days after Fogelman was decided, the Ontario Superior Court was once again asked to consider whether IDEL constitutes constructive dismissal. However, this time the Court reached the opposite conclusion from the Court in Coutinho. In Taylor v. Hanley Hospitality Inc., 2021 ONSC 3135, the Court held that the IDEL regulation overturned the common law, that IDEL did not constitute constructive dismissal under the common law, and that Coutinho had been wrongly decided.

The Court in Taylor reasoned that statutes enacted by the legislature, including their regulations, displace the common law. The Court ruled that it “offends the rules of statutory interpretation to give an interpretation that renders legislation such as the IDEL regulation meaningless.” This was demonstrated at para 21, where the Court held:

[21] (xii) the Regulation can and did change the common law.
Effectively, “in these circumstances (COVID), you are not laid off,
not constructively dismissed, and you are on statutory leave of
absence”;

The Court concluded that in issuing the IDEL regulation, the legislature clearly intended that pandemic-related temporary layoffs will not constitute constructive dismissal, and that to find otherwise would defeat the legislature’s purpose of protecting employers from lawsuits stemming from the economic crisis caused by the pandemic. Further, the Court in Taylor ruled that the Coutinho decision failed to consider significant factors relating to the context of the pandemic and IDEL regulation. Thus, the Court in Taylor held that Coutinho was wrongly decided, and that it was not bound by Coutinho.

Which line of reasoning prevails?

Since Coutinho, Fogelman, and Taylor were all decided by the same level of court, none of these decisions has authority over the others. As it stands, the case law on this topic remains unsettled. It is unlikely that we will receive a clear answer to address the inconsistency in the case law until the Court of Appeal has an opportunity to weigh in and provide a more substantive judgment on this issue. Until this time, it would be prudent for employers to take caution and to consult a dismissal lawyer before placing employees on IDEL. Employees who have been placed on IDEL should similarly consider reaching out to a dismissal lawyer before resigning.

At Soni Law Firm we have a proven record of excellence. We are expert constructive dismissal lawyers and are here to assist both employers and employees in protecting and enforcing their rights. We would be pleased to represent you in your employment dispute. Contact us today to discuss your concerns about constructive dismissal. We offer free consultations and are here to listen.

About Post Author

Rahul

Rahul founded Soni Law Firm, a boutique employment law firm focusing on contingency law, with the goal of taking his Downtown Toronto litigation experience and making it accessible to Ontario’s Main Street employees and employers.