In May of 2020, in response to the burgeoning COVID-19 pandemic, the Ontario government introduced Ontario Regulation 228/20 under the Employment Standards Act, 2000 ("ESA"). The Regulation, among other things, deemed that all temporary layoffs relating to the COVID-19 pandemic were deemed to be Infectious Disease Emergency Leaves ("IDEL").

In April of 2021, a decision of the Superior Court of Justice held in Coutinho v Ocular Health Centre Ltd., 2021 that an IDEL constitutes a constructive dismissal at common law. In this case, the Plaintiff was temporarily laid off from her position as an office manager. The Defendant employer argued that the layoff constituted an IDEL under Ontario Regulation 228/20 and, therefore, it did not constitute a constructive dismissal. The Plaintiff argued that there was nothing in the ESA or Ontario Regulation 228/20 that prevented her from pursuing a common law claim for constructive dismissal. Justice Broad accepted the Plaintiff's argument.

On June 7, 2021, Justice Ferguson reached a different conclusion in Taylor v Hanley Hospitality Inc., 2021, and held that the decision in Coutinho is wrong in law. In Taylor, Justice Ferguson granted the Defendant's motion and dismissed the Plaintiff's claim, holding that an IDEL does not constitute a constructive dismissal at common law.

Key takeaways from Taylor

A court has never concluded that the ESA does not or cannot displace the common law. In making its decision, the Court relied upon Elsegood v Cambridge Spring Service (2001) Ltd., 2011, a decision of the Ontario Court of Appeal in which the Court of Appeal determined that statutes can displace the common law. The Court in Taylor determined that by enacting Ontario Regulation 228/20, employees on an IDEL were on a leave of absence for all purposes and that the Regulation changed the common law.

The Court stated that the context of the IDEL is important. It stated that the legislature created the problem by forcing employers to lay off employees, thereby exposing employers to constructive dismissal claims. The legislature amended the ESA in order to avoid the consequences arising from its decisions.

The Court held that an employee placed on IDEL is placed on IDEL for all purposes. It did not make sense to rule on the one hand that an employee is on a leave of absence for the purposes of the ESA but constructively dismissed at common law on the other hand.  As a result, the Court determined that an employee placed in IDEL is not constructively dismissed for the purposes of either the ESA or the common law.

The Court held that Coutinho failed to consider these factors and that the analysis presented within that case was wrong in law, and that it was not bound by Coutinho. In the end, the Court acknowledged that "exceptional circumstances call for exceptional measures", and applied a common sense approach that would not serve to worsen the economic impact of the pandemic.

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