Court Issues First Decision on the Infectious Disease Emergency Leave Regulation in COVID-19 Constructive Dismissal Case

An Ontario court recently issued a first decision interpreting the Infectious Disease Emergency Leave Regulation in a COVID-19-related constructive dismissal case. 

Employee Claims Constructive Dismissal

The employee began working at an ophthalmic clinic in 2014 as an ophthalmic technician. She was promoted to office manager in 2018 and earned $52,900 per year. The employer operated several such clinics across Ontario.

On April 28, 2020, the employer’s lawyer wrote to two of three ophthalmologists who worked at the clinic, alleging that they had failed to comply with COVID-19  physical distancing guidelines in relation to their practices at the clinic and requiring them to take immediate steps to comply with the physical distancing guidelines, failing which they would not be permitted to practice at the clinic. The letters also alleged that they were in default of certain financial obligations to the employer. 

By letter dated April 30, 2020 the ophthalmologists’ lawyer responded, asserting that the allegations in respect of purported breaches of COVID-19 physical distancing guidelines were “completely baseless” and denying that that there were any monies owing.

On April 30, 2020, the employer changed the locks to the premises.

The next day, the employee showed up for work and the employer advised her and the two ophthalmologiststhat they would not be allowed entry. The employee went home and received a phone call from the employer telling her that the clinic was closed, but she would be paid until further notice. She was also told that if she discussed their conversation with the ophthalmologists, her conduct would be cause for termination. 

On May 29, 2020, the employer wrote to the employee advising her that it had closed the clinic and found it necessary to temporarily reduce its workforce. The letter also stated that, effective May 29, 2020, the employee was being placed on temporary layoff and a Record of Employment would be issued as soon as possible and would include her pay up to and including the effective date of the layoff. It also provided a link with information regarding unemployment benefits. Finally, the letter stated that the employer would do its best to recall the employee to her position as soon as possible.

The employee brought an action against the employer on June 1, 2020 seeking damages in the sum of $200,000 for constructive dismissal and for punitive or aggravated damages. 

The employee also became re-employed with the ophthalmologistsat a new clinic on July 22, 2020 at an annual salary greater than her salary at the time she left the employer.

In response, the employer moved for summary judgment on the grounds that:

  • pursuant to O. Reg 228/20Infectious Disease Emergency Leave (the “IDEL Regulation”) under the Employment Standards Act (the “ESA”), the employee was deemed to be on emergency leave and the temporary elimination of her employment duties and work hours did not constitute constructive dismissal;
  • because the employee was not constructively dismissed as she was deemed to be on infectious disease emergency leave, she had no cause of action against the employer; and
  • the employee has fully mitigated any damages that she may have incurred through her prompt re-employment.

Court Interprets IDEL Regulation in Favour of Employee

The court began by reviewing the pertinent provisions of the IDEL Regulation. Of particular importance was s. 7, which reads:

7. (1) The following does not constitute constructive dismissal if it occurred during the COVID-19 period:

1. A temporary reduction or elimination of an employee’s hours of work by the employer for reasons related to the designated infectious disease.

2. A temporary reduction in an employee’s wages by the employer for reasons related to the designated infectious disease.

The court then acknowledged that there existed no other case law on the interpretation of the IDEL Regulation. As such, it stated that the starting point of its analysis must be guided by s. 8(1) of ESA which provides:

8 (1) Subject to section 97, no civil remedy of an employee against his or her employer is affected by this Act.  

The court then explained that s. 97(2) provides that an employee who files a complaint under the ESA alleging an entitlement to termination pay or severance pay may not commence a civil proceeding for wrongful dismissal if the complaint and the proceeding would relate to the same termination or severance of employment. However, the court noted that the employee had not filed a complaint against the employer under the ESA. As such, the court held that s. 97 had no application to the circumstances of the case.

Referring back to the IDEL Regulation, the court then stated:

“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 [the employer] 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. […]

In my view [the employee] was entitled to treat [the employer]’s unilateral imposition of the layoff as bringing the contract of employment to an end and had the immediate right to sue for constructive dismissal. 

In my view the written notice by [the employer] on May 29, 2020 to [the employee] that she was being laid off without pay constituted a constructive dismissal and [the employee] was not barred by the IDEL Regulation from bringing an action against [the employer] at common law as a result.”

As such, the court held that the employee had been constructively dismissed and dismissed the employer’s defences based on the IDEL Regulation. 

However, the court refused to grant summary judgment, finding that there were genuine issues for trial, namely: whether the employer had just cause for the termination and, if so, whether the employer was thereby relieved of the obligation to pay termination pay pursuant to the ESA.

In the result, the court therefore dismissed the employer’s motion for summary judgment and issued directions for trial.

Get Help

If you are an employee concerned about the legality of workplace policies, or an employer looking to ensure you stay compliant with health and safety regulations as they relate to COVID-19, contact the offices of Guelph employment lawyer Peter McSherry. We regularly assist employees with employment and labour issues. Contact us online or by phone at 519-821-5465 to schedule a consultation.