Taylor v. Hanley Hospitality Inc., 2022 ONCA 376

7 minute read
24 May 2022

Have you ever seen a movie and eagerly anticipated the sequel, only to be bitterly disappointed?

Employment lawyers felt the same way when they read the long-awaited decision of the Ontario Court of Appeal in Taylor v. Hanley Hospitality Inc., 2022 ONCA 376, released by the Court of Appeal May 12, 2022.

Justice Lois Roberts drafted the reasons for decision for the unanimous panel of three. This decision was expected to resolve the debate whether unpaid layoffs in the wake of COVID-19 could constitute constructive dismissal at common law, even if statutory notice and severance under the Ontario Employment Standards Act, 2000 were not owing. Some offices even had informal betting pools as to how the Court of Appeal would decide.

In the end, the decision was a complete non-decision. The Court of Appeal refused to decide the central question of whether an unpaid layoff or deemed Infectious Disease Emergency Leave (IDEL) constituted constructive dismissal at common law on technical grounds.

In short, the law is as murky as it has been since the start of COVID-19 over two years ago!

It is important to note that there was no trial in this matter. Justice Jane Ferguson of the Trial Court had made her decision on the basis of the legal issues as stated in the employee's Statement of Claim and her employer's Statement of Defence. Justice Ferguson's decision can be found at 2021 ONSC 3135.

The background facts are quite commonplace. Candace Taylor was the Assistant Manager of a Tim Horton's location in Whitby. The government of Ontario ordered that restaurants limit their offerings to take out and delivery. Ms. Taylor was laid off on March 27, 2020 without pay. The Tim Horton's location was not closed, but operated with reduced staffing.

On July 3, 2020, Ms. Taylor started a constructive dismissal lawsuit. She was recalled back to employment in September 2020 and returned to work.

Ms. Taylor argued that her layoff was simply "a business decision" and constituted constructive dismissal at common law.

Her employer, Hanley Hospitality, plead that "as a result of the Ontario government's declaration of the state of emergency", it was "left with no choice but to temporarily lay off over 50 employees." It also plead that Taylor was actually not laid off, but relied on Section 50.1(1.1), the IDEL provisions of the Employment Standards Act, 2000 and Ontario regulation 228/20. The regulation deems employees who are not performing their work due to reasons related to the designated infectious disease to be on IDEL . These employees are not entitled to notice or severance under the statute.

Justice Jane Ferguson took judicial notice of some well-known facts that were not in evidence, but were plead in Hanley Hospitality's Statement of Defence:

  1. Hundreds of thousands of Canadians had their employment interrupted by the COVID‑19 pandemic;
  2. On March 17, 2020, the Ontario Government declared a state of emergency due to an outbreak of COVID‑19;
  3. As a result of the declaration, Tim Hortons was required by the Ontario Government to close all of their storefronts and was limited to takeout and delivery;
  4. Various levels of government have undertaken a variety of evolving emergency measures to attempt to mitigate the effects of the pandemic. Those measures included the complete closure of certain businesses and restrictions on how certain businesses can operate;
  5. Those emergency measures have had an impact on the employment market. Through no choice of their own, some employers have had to temporarily close their businesses or cut back their operations;
  6. The various levels of government have implemented legislative measures to address both (1) the unprecedented (in modern times, at least) impact of the pandemic; and (2) the impact of the emergency measures on businesses and the employees who work in those businesses; and
  7. The province undertook legislative measures to address the employment impacts of the pandemic and the emergency measures implemented to mitigate the effects of the pandemic.

The Court of Appeal simply ducked the question. The Court of Appeal criticized Justice Jane Ferguson for deciding the decision on a Rule 21 motion, which should only be used for decisions that do not require any evidence and can be decided simply on pleadings.

Justice Jane Ferguson noted that Ms. Taylor did not deliver a Reply and therefore was deemed to admit the facts relating to the reasons for the layoff as plead by the employer. The Court of Appeal correctly noted that the lack of a Reply cannot be taken as an admission of the allegations in the Statement of Defence, since a Reply is not necessary where the issue has been addressed in the Statement of Claim.

Despite this technical error, counsel for both parties on the appeal were aware of the critical importance of the case and submitted that the Court of Appeal should provide guidance whether IDEL could constitute constructive dismissal at common law. Justice Roberts observed:

[45] The parties are now essentially seeking a standalone declaration of the meaning of s. 50.1 of the ESA and O. Reg. 228/20. Divorced from any factual foundation, the issue is academic at this stage of these proceedings because it would not resolve the fact-driven dispute between the parties: Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342, at para. 15. As a result, it is at this court's discretion whether the issue should be entertained and determined at this stage: Borowski, at para. 16. I would refrain from interpreting the provision and regulations. Not only was this remedy not sought in the parties' respective pleadings, but for the reasons stated above, this panel has neither the record nor the submissions that would permit us to carry out a proper analysis of s. 50.1 of the ESA and O. Reg. 228/20The matter has been returned back to the trial level to be determined before another judge in the Superior Court of Justice.

The Ontario employment law community continues to wait for guidance from the courts on this critical issue.

Should you have any specific questions about this article or would like to discuss it further, you can contact one of the authors or a member of our Employment, Labour & Equalities Group.

NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.