Constructive dismissal in Ontario – a tale of two decisions

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There are two recent decisions of the Ontario Superior Court that contradict one another on the issue of whether placing an employee on IDEL (Infectious Disease Emergency Leave) amounts to common law constructive dismissal.

The first: Countinho v. Ocular Health Centre Ltd., released on April 27, 2021. This decision was highly touted to have provided much needed clarity on this contentious issue. Therein the employer defended the wrongful dismissal claim by arguing that under the Employment Standards Act’s IDEL Regulation the employee was deemed to be on an ‘‘emergency leave’’ and therefore there was no constructive dismissal under the common law. Coutinho countered that nothing in the ESA or its regulations lessened common law reasonable notice rights. Ocular disagreed and brought a motion for summary judgment. The judge agreed with the employee’s argument and explained that since the scope of any regulation is constrained by its enabling legislation, 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’’. Specifically, the Court held that the IDEL Regulation does not affect an employee’s right to pursue a civil claim for constructive dismissal at common law.  As the regulations were drafted – the judge was absolutely correct when applying a literal interpretation of the language used in the legislation.

Meaning: 1) the IDEL Regulation does not impact whether a common law constructive dismissal exists; and 2) regardless of IDEL, no employer has the right at common law to lay off an employee absent an agreement to the contrary.

The Ontario Ministry of Labour appeared to reinforce Countinho’s interpretation in its publication: ‘‘Your Guide to the Employment Standards Act: temporary changes to ESA rules’’.  Therein it states that the IDEL “rules affect only what constitutes a constructive dismissal under the ESA.  These rules do not address what constitutes a constructive dismissal at common law.”

The second: Taylor v. Hanley Hospitality o/a Tim Hortons on June 7, 2021, which applied a purposive interpretation to the IDEL Regulation. Therein the Court dealt with a similar set of facts and the Counterinho decision. The judge expressly disagreed with the employee’s position and the decision in Countinho  “…in these times of COVID-19” and held:

(i)…it offends the rules of statutory interpretation to give an interpretation that renders legislation meaningless. That issue was never addressed in Coutinho;

(ii) Coutinho never addressed the consequential analysis – what does IDEL and the Regulation actually mean if not what Tim Hortons says it means?

…(ix) one should not forget that the common law evolves as the changing times make it necessary to do so;

…(xii) the Regulation can and did change the common law…

(xiii) it is essential that the court remember the context of IDEL and the Regulation;

…(xiv) the court in Coutinho failed to consider and appreciate those factors. It is submitted, with respect, that the analysis in Coutinho is wrong in law. This court is not bound by it;

*          *          *

I agree with Tim Hortons that exceptional situations call for exceptional measures. The Ontario Government recognized the inherent unfairness in subjecting employers to wrongful dismissal claims as a result of the government imposing a state of emergency. If they did not take action, these claims would only serve to make the economic crisis from the pandemic even worse. It is just common sense. The plaintiff’s action is dismissed.

Meaning: 1) constructive dismissal cannot be the basis of a common law reasonable notice claim where occasioned by an IDEL; and 2) because of IDEL, the common law changed. IDEL provides an exception to what is a constructive dismissal under the common law given employers were required by law to close and lay off employees.

Where do we go from here? Both decisions are from the same court and have created two lines of cases, returning the law to being “unsettled’. This is because these cases carry equal “precedential weight” on future decisions on this issue. Given the number of persons impacted by the IDEL Regulations, this could create uncertainty and strife. Hopefully this won’t be the case and future Superior Court decisions will apply the approach in Taylor. If not, we may need to wait for the Ontario Court of Appeal to weigh in.


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