IDEL protected employees whose work hours or wages were temporarily reduced or eliminated by their employer between March 1, 2020, and July 3, 2021, for reasons related to COVID-19.

Usually, employees who are laid off for a period longer than thirteen weeks are considered to have been fired. They can sue for additional pay (called notice pay) and, in some cases, severance pay. Many employers mistakenly took IDEL to mean they no longer had to worry about the thirteen-week limit for layoffs so they could lay employees off for as long as they wished without consequence...so long as the layoff didn’t continue beyond the COVID-19 Period. However, as we wrote about in June 2020, many employment litigation lawyers weren’t so sure that the Regulation provided employers with that much protection from liability.

The Court Ruling

Under normal circumstances, when employees have their working hours or wages cut, they have the option to resign and claim “constructive dismissal.” Constructive dismissal occurs when an employer changes the essential terms of an employee’s employment (such as their working hours or wages) and the employee resigns instead of accepting those changes. In those cases, the Court will treat the employee as if they were fired and will award the employee notice pay and other benefits that employees who have been wrongfully dismissed are usually entitled to. IDEL provided that a temporary reduction in a worker’s hours or wages would not be considered a constructive dismissal if it occurred during the COVID-19 period.

However, an employee’s right to claim constructive dismissal does not come solely from the Employment Standards Act. There are also laws created by judges called the “common law”, which gives employees the right to sue for constructive dismissal. It was not initially clear whether the IDEL would affect or take away employees’ rights to claim constructive dismissal under the common law. While several lawsuits have been launched by employees who were laid off during the COVID-19 period, Coutinho v. Ocular Health Centre Ltd. is the first case where a Court has made any decision on the issue.

In this case, the Court ruled that a temporary layoff during the COVID-19 period does constitute a constructive dismissal under the common law. Obviously, this is very concerning for employers who understood the purpose of the Regulation was to offer employers protection from lawsuits arising from reducing their workforce due to falling revenues or other effects of the pandemic.

What This Means For You

Given how serious and widespread the impact of this Court decision could be, it’s almost a given that it will be appealed. However, until it’s overturned, this will remain the state of the law in Ontario. As such, if you’re an employer who wants to temporarily lay off or reduce their employees’ hours or wages, you should understand you can be successfully sued for constructive dismissal unless your employee(s) agree in writing to the changes being made.

For employees, this means that your employer does not have an absolute right to lay you off or make important changes to your employment during the COVID-19 period. Unless you expressly agree to those changes, you have the right to resign and sue for constructive dismissal.

Going forward, It will be interesting to see how the Courts will continue to rule on this issue. Will the Government of Ontario introduce further legislation aimed at protecting employers and will that mean fewer protections for employees during COVID-19?

Either way, whether an employer or employee, the best way you can protect yourself at this unprecedented time of uncertainty is to know your rights under the law. You can rest assured, Walker Law will continue to follow any changes in the law as it pertains to this, or any other issue affecting Black Canadians, and provide any updates as new developments occur.