Superior Match-Up: Same Facts, Different Results

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The Ontario Superior Court of Justice was at odds with itself regarding the decisions in two recent cases, namely, Coutinho v. Ocular Health Centre Ltd. 2021 ONSC 3076 and Taylor v. Hanley Hospitality Inc. 2021 ONSC 3135. The two cases involved largely similar facts: each employee was laid off by their respective employer during the COVID-19 pandemic and each employer sought to rely on O. Reg. 228/20: Infectious Disease Emergency Leave which deems that an employee who is laid off (or whose hours are reduced) for reasons related to COVID-19 to be on an infectious disease emergency leave (IDEL). The effect, or perhaps the intended effect, is to not permit an employee to make a constructive dismissal claim due to such layoff.

This appears straightforward on its face, however two completely opposite judgements resulted from substantially similar facts.

Coutinho v. Ocular Health Centre Ltd.

The court in Ocular Health Centre Ltd., surprising many, found that O. Reg. 228/20 does not affect an employee’s right to pursue constructive dismissal against the employer at common law. Justice Broad found that s. 8(1) of the Employment Standards Act, 2000, “unequivocally” provides that the ESA will not affect the employee’s right to a civil remedy. Because the deemed IDEL is found in a regulation, and a regulation is constrained by its enabling statute (here the ESA), the IDEL cannot be interpreted in a way to take away the employee’s right to a civil remedy. Justice Broad also relied on the Ministry of Labour’s online ESA guide in making its decision emphasizing the following passage:

“These rules affect only what constitutes a constructive dismissal under the ESA. These rules do not address what constitutes a constructive dismissal at common law.”

Justice D. A. Broad in Couthino at para. 46.

Taking the reasoning above, and disposing of a few other arguments, Justice Broad found that the employee could claim constructive dismissal despite the apparent statutory bar.

Taylor v. Hanley Hospitality Inc.

The Hanley Hospitality Inc. matter had similar relevant facts but from it came a completely opposite conclusion just over a month after the Ocular decision discussed above. Justice Ferguson engaged directly with the Ocular decision and found several factors that were not sufficiently addressed by the court in Ocular.

As the IDEL regulation deems that an employee’s layoff is not a layoff but is instead an IDEL granting to the employee ESA rights such as reinstatement following the IDEL then, says Justice Ferguson, the common law on layoffs becomes inapplicable. This is plain on the face of the IDEL regulation.

The court in Ocular failed to grapple with the consequences of the employee’s argument in that case – if the employee may still sue for constructive dismissal, then what purpose do the deeming provisions of the IDEL regulation serve? In which circumstances could they be activated? 

Another key issue flagged by the court is the argument surrounding s. 8(1) of the ESA. Justice Ferguson pointed out that no court prior to Ocular had interpreted s. 8(1) as preventing the ESA from displacing the common law. In fact, prior decisions which regarded s. 8(1) found that the section works merely to confirm that the ESA is one forum, and not the exclusive forum, for employee redress.

Meanwhile, while the court in Ocular relied on the Court of Appeal decision in Elsegood v Cambridge Springs Service (2001) Ltd. for the proposition that an employer cannot lay off an employee unless the employee agrees, the court in Henley pointed out that the Elsegood decision also stated that statutes enacted by the legislature displace the common law and that the idea that common law continues to operate independently of the ESA is a “faulty premise”. The court found itself bound by the decision of the Court of Appeal in Elsegood.

Finally, Justice Ferguson also gave some weight to the commonsense approach – claims for constructive dismissal would serve to aggravate the economic fallout resulting from the pandemic, she states. The government’s intent in amending the ESA and putting O. Reg. 228/20 in place is to prevent such aggravation and the “inherent unfairness” in subjecting employers to wrongful dismissal claims during the pandemic.

What’s Next?

Whichever analysis (or outcome) you may prefer, the question is currently unsettled until the Court of Appeal weighs in on the matter. Perhaps the legislation or the IDEL regulation could have specifically outlined the impact of the new rules on the common law, but as neither parliament nor the government chose to do so, we will need to rely on the courts to determine the prevailing argument.

Reviewing recent Hansard transcripts shows that MPPs are under the impression that the IDEL does what it says on the tin. On February 16, 2021, the Parliamentary Assistant to the Minister of Labour, Jane McKenna, pointed out that the government made a “regulatory change” to the ESA so that “employees who have had their hours temporarily reduced or eliminated because of the pandemic will be deemed to be on infectious disease emergency leave instead of laid off.” The MPP suggested that the rules are a “lifeline” to help businesses stay afloat and keep them from being “forced” to terminate their employees following the expiry of a layoff period. Committee and assembly transcripts dating back at least one year show similar thinking on part of government and opposition MPPs.

However, while the quoted MPPs are thinking of consequences to employers, the question of the consequence to employees remains unanswered. The COVID-19 period, as defined in O. Reg. 228/20 has been extended multiple times and is currently slated to end on September 25, 2021. Some employees may have been left in the lurch as a result: they may be enduring a period of extended layoff, characterized as an IDEL, with apparently no recourse. Perhaps this is a partial motivation for the court in Ocular.

In any case, there will not be a satisfying answer until the Ontario Court of Appeal rules on the matter. Such a decision will have important consequences for employers and employees. We have helped businesses in Ontario, and throughout Canada, navigate COVID-19-related workplace regulations and decisions since March 2020. If you have any concerns with layoffs, or any other workplace matter, do not hesitate to reach out to Bridge Legal & HR Solutions at 647-794-5442 or at admin@bridgelegalhr.ca.

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