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Can a COVID-19 layoff constitute constructive dismissal?


By Sophia Abbatt

Question asked and answered? Not definitively. Employment lawyers everywhere had hoped the Ontario Court of Appeal would finally resolve this question in Taylor v Hanley Hospitality, but the Court decided the appeal on other grounds, and has left us waiting with bated breath.


Pre-COVID-19, non-unionized employees who were temporarily laid off for an extended period could claim their common right to a reasonable notice period or pay in lieu of notice of termination through a claim for constructive dismissal. With the arrival of COVID-19, the Ontario government declared a state of emergency and amended s. 50.1 of the Employment Standards Act (ESA) and provisions of O. Reg 228/20 to include a new category of leave under the ESA: the infectious disease emergency leave (the “IDEL amendments”).

With the introduction of IDEL, workers were left with the following question: If they were temporarily laid off as a result of the impact of COVID-19 on their employer’s operations, could they make a claim of constructive dismissal in the courts, or do the IDEL amendments prevent them from doing so?

What Have the Courts Said So Far?

Three trial-level decisions have addressed the issue of whether the IDEL amendments restrict an employee’s right to bring a claim of constructive dismissal under common law. In both Coutinho v Ocular Health Centre and Fogelman v IFG, 2021 ONSC 4042, judges of the Superior Court of Justice held that the IDEL amendments do not preclude employees from pursuing claims of constructive dismissal under common law. In these cases, the courts held that the new ESA rules only affect claims made to notice or severance entitlements in the ESA itself, but do not supersede the civil remedies otherwise available to an employee at common law.

In Taylor v Hanley Hospitality, on the other hand, a Superior Court judge held that the IDEL amendments do operate to prevent an employee from claiming constructive dismissal under the common law. In that case, the judge dismissed the plaintiff’s claim of constructive dismissal on the basis that the IDEL amendments effectively changed the law in Ontario to provide that when an employee is laid off as a result of COVID-19, they are not constructively dismissed but are considered to be on a statutory leave of absence.

The different outcomes in these trial-level decisions left workers waiting for a decision from the Ontario Court of Appeal.

The Hanley Hospitality decision was appealed to the Ontario Court of Appeal. One of the questions before the Court was whether the lower court erred in holding that the IDEL amendments displaced the appellant’s common law right of action for constructive dismissal. Although the parties submitted that a decision on this issue would be useful, not only for the parties themselves, but also for other employees and employers, the Court of Appeal declined to address the issue. It held that the trial judge should not have determined the case or interpreted the meaning of the IDEL amendments on a summary basis without hearing evidence. The Court of Appeal refused to provide its own interpretation of the legislation because, as a result of these errors, the evidentiary record before it and the parties’ submissions were not sufficient to allow it to do so. Instead, the Court set aside the lower court’s order and sent the case back to the Superior Court of Justice to be heard by a different judge.

What Does This Mean for Workers?

For non-unionized workers who have been temporarily laid off under the IDEL provisions, there is still uncertainty regarding their ability to make a constructive dismissal claim under the common law. It is significant that two of the three trial-level court decisions have said that the IDEL amendments do not displace the common law of constructive dismissal. So far, the only case to have reached the opposite conclusion – Taylor v Hanley Hospitality – has been set aside and, unless the parties settle the matter, will be heard again before a different Superior Court judge. However, we may not have a definitive answer until the IDEL amendments are interpreted by the Court of Appeal.


Sophia Abbatt is a summer student in GP’s Toronto office.