Infectious Disease Emergency Leave Does Not Oust Common Law Constructive Dismissal

Does Infectious Disease Emergency Leave under the Employment Standards Act, 2000, S.O. 2000, c.41 oust the common law of constructive dismissal or were employees ostensibly placed on leave actually terminated?

In Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076 (CanLII), Justice David A. Broad of the Ontario Superior Court ruled that the regulatory changes did not oust the common law, meaning that employees objecting to be placed on IDEL could still sue for constructive dismissal damages.

Facts

On May 29, 2020, and in response to the COVID-19 pandemic, the Ontario Government made O. Reg. 228/20 Infectious Disease Emergency Leave (the “IDEL Regulation”). The rules in the IDEL Regulation were stated to apply during the “COVID-19 period” which was initially from March 1 to July 3, 2020.

The pertinent provisions of the IDEL Regulation which were in effect on May 29, 2020 are as follows:

4. (1) For the purposes of subclause 50.1 (1.1) (b) (vii) of the Act, the following reason is prescribed:

1. The employee’s hours of work are temporarily reduced or eliminated by the employer for reasons related to the designated infectious disease.

(2) An employee who does not perform the duties of his or her position because of the reason set out in paragraph 1 of subsection (1) is deemed to be on infectious disease emergency leave under section 50.1 of the Act in respect of any time during the COVID-19 period that the employee does not perform such duties because of that reason.

…

6. (1) An employee whose hours of work are temporarily reduced or eliminated by the employer, or whose wages are temporarily reduced by the employer, for reasons related to the designated infectious disease during the COVID-19 period is exempt from the application of sections 56 and 63 of the Act for the purposes of determining whether the employee has been laid off, and the employee shall not be considered to be laid off under those sections, other than under clause 63 (1) (d) of the Act.

(2) Subsection (1) does not apply to an employee whose employment was terminated under clause 56 (1) (c) of the Act or severed under clause 63 (1) (c) of the Act before May 29, 2020.

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.

(2) Subsection (1) does not apply to an employee whose employment was terminated under clause 56 (1) (b) of the Act or severed under clause 63 (1) (b) of the Act before May 29, 2020.

The plaintiff, Ms. Coutinho was employed by the defendant Ocular at its Cambridge clinic earning $52,900 per year. She commenced her employment with Ocular in 2014 as an ophthalmic technician. She was promoted to an office manager in October 2018.

On May 29, 2020 one of the principals of Ocular wrote to the plaintiff advising of the following:

• Ocular was recently forced to close the Cambridge clinic and as part of that process found it necessary to temporarily reduce its workforce;
• effective May 29, 2020 Coutinho was being placed on temporary layoff and a Record of Employment will be issued as soon as possible and will include her pay up to and including the effective date of the layoff;
• a link was provided with information regarding unemployment benefits;
• Coutinho was directed to ensure that she advise Ocular of any change in her contact information so that she may be contacted in the event of a recall and she was also directed to advise Human Resources if she secures alternate employment;
• Ocular would do its best to recall Coutinho to her position as soon as possible

  Coutinho became re-employed by no later than July 22, 2020 at an annual salary greater than her salary at the time she left Ocular.

  Legal Positions and Arguments

  By Statement of Claim issued June 1, 2020 Coutinho brought action against Ocular seeking damages in the sum of $200,000 for constructive dismissal and for punitive or aggravated damages. In the Statement of Claim, Coutinho sought all of her common law and statutory entitlements.

  Ocular pleaded that, pursuant to O. Reg 228/20, Coutinho was deemed to be on emergency leave and the temporary elimination of her employment duties and work hours did not constitute a constructive dismissal.

  Ocular took the position that Coutinho’s hours of work were temporarily reduced or eliminated for “reasons related” to COVID-19 and she was therefore deemed to be on infectious disease emergency leave.

  Ocular further aruged that, pursuant to 7(1) of the IDEL Regulation, the temporary reduction or elimination of Coutinho’s hours of work did not constitute a constructive dismissal and therefore she has no cause of action against it for constructive dismissal.

  Coutinho argued the IDEL Regulation does not affect her common law right to pursue a civil claim against Ocular for constructive dismissal.

  Decision of the Ontario Superior Court

  Justice Broad, in agreeing with the plaintiff’s position, provided the following reasons for decision:

  [36] I find, for the reasons that follow, that the IDEL Regulation does not affect Coutinho’s right to pursue a civil claim for constructive dismissal against Ocular at common law.

  …

  [38] The starting point for the analysis is section 8(1) of the Employment Standards Act, 2000 (the ESA”) which provides as follows:

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

  [39] Section 97 of the ESA has no application to the circumstances of the case at bar…

  [41] Ms. Allen for Ocular argues that, given the unprecedented emergency brought on by the global COVID-19 pandemic and the severity of its impact on employers and employees in Ontario, section 7 of the IDEL Regulation, which deems a temporary layoff by an employer for reasons related to COVID-19 not to constitute a constructive dismissal, ought to be interpreted to apply to not only constructive dismissals for the purposes of the ESA, but also at common law.

  [42] In the case of Bristol-Myers Squibb v. Canada (Attorney-General, 2005 SCC 26 Binnie, J., writing for the majority, citing Dreidger, Construction of Statutes (2nd ed. 1983) observed at para. 38 that

  …in the case of regulations, attention must be paid to the terms of the enabling statute:

  It is not enough to ascertain the meaning of a regulation when read in light of its own object and the facts surrounding its making; it is also necessary to read the words conferring the power in the whole context of the authorizing statute. The intent of the statute transcends and governs the intent of the regulation. (Elmer A. Dreidger, Construction of Statutes (2nd ed.1983), at p. 247)

  This point is significant. The scope of the regulation is constrained by its enabling legislation. Thus, one cannot simply interpret a regulation the same way one would a statutory provision.

  [43] 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 Ocular 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.

  [44] The fact that s. 7 of the IDEL Regulation may not be interpreted so as to take away an employee’s right of action at common law against her/his employer for constructive dismissal is reinforced by the online publication of the Ontario Ministry of Labour, Training and Skills Development (the “Ministry”), cited by Ocular in its Factum, entitled “Your Guide to the Employment Standards Act: temporary changes to ESA rules” https://www.ontario.ca/document/your-guide-employment-standards-act-0/covid-19-temporary-changes-esa-rules (the “Ministry Guide”).

  [45] In the section entitled “Overview” at page 1 the Ministry Guide states that on May 29, 2020 the government made a regulation under the ESA in response to COVID-19. During the COVID-19 period, a non-unionized employee is “deemed” on a job-protected infectious disease emergency leave if their employer has temporarily reduced or eliminated their hours of work because of COVID-19.

  [46] Under the heading “Constructive dismissal” on page 4 the Ministry Guide stated as follows:

  O. Reg. 228/20 establishes that there is no constructive dismissal under the ESA where a non-unionized employee’s wages or hours of work are temporarily reduced or temporarily eliminated by their employer for reasons related to COVID-19 from March 1, 2020 to July 3, 2021. This rule does not apply where the termination or severance resulted from a constructive dismissal that occurred before May 29, 2020. For a termination or severance resulting from a constructive dismissal to occur before May 29, 2020, it means the employee must have been constructively dismissed and quit their employment within a reasonable timeframe, all prior to May 29, 2020.

  For a discussion of each of the conditions that must be met in order for this rule to apply, please see Conditions for O. Reg. 228/20 temporary layoff and constructive dismissal rules to apply.

  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.

  (underlining added)

  [47] In my view, in reviewing the purpose of the IDEL Regulation the court can consider not only the wording of the regulation itself but also extrinsic evidence such as the Ministry Guide.

  [48] The entitlement of the court to consider such extrinsic evidence in interpreting subordinate legislation was made clear by the decision of the Alberta Court of Appeal in Heppner v. Alberta (Ministry of Environment) 1977 ALTASCAD 206 (CanLII), [1977] A.J. No. 523 (Alta C.A.)...

  [49] Although it is not binding on the court, the Ministry Guide is of assistance by offering insight into the Ministry’s intention in promulgating the provisions of the IDEL Regulation respecting constructive dismissal, including the stipulation that they do not affect an employee’s common law right to advance a civil claim of constructive dismissal, a position which is consistent with s. 8(1) of the ESA.

  [50] It is well-established that “at common law, an employer has no right to lay off an employee and that absent an agreement to the contrary, a unilateral layoff by an employer is a substantial change in the employee’s employment, and would be a constructive dismissal” as stated in Elsegood v. Cambridge Spring Service 2002 Ltd., 2011 ONCA O.J. No. 6095 (C.A.) at para. 14.

  [51] Ms. Allen for Ocular submits that Coutinho’s placement on temporary layoff on May 29, 2020 did not constitute a constructive dismissal because she did not make inquiries of Ocular as to when she might be called back to work prior to commencing the action on June 1, 2020, just two business days following Mr. Reinstra’s letter giving notice of the layoff.

  [52] I am unable to accept this submission.

  [53] The Court of Appeal in McGuinty v. 1845035 Ontario Inc., 2020 ONCA 816 (C.A.) confirmed at para. 24 that when an employee has been constructively dismissed

  the employee has an election to make — whether to continue to work, and so accept the single breach/course of conduct, or to treat that breach/conduct as bringing the contract to an end and sue for constructive dismissal. A claim that the employee has condoned a breach or course of conduct is a defence to a claim of constructive dismissal and the burden is on the employer to establish it.

  [54] No authority was cited by Ocular for the proposition that, following a unilateral imposition of a layoff by the employer, an employee is under an obligation to make inquiries of the employer as to when she/he may be called back to work as a precondition to bringing an action for constructive dismissal.

  [55] In my view Coutinho was entitled to treat Ocular’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.

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

  Damages

  Where things get complicated is with respect to the court’s finding on damages.

  Coutinho acknowledged she fully mitigated her common law damages by commencing new employment on July 22, 2020.

  Coutinho argued Ocular failed to comply with its duty under the ESA to pay her six weeks’ salary as termination pay commensurate with her six years of service. Based upon her annual salary of $52,900, Coutinho’s termination pay entitlement comprised $6,103.85.

  The court went on to find that, subject to the employer’s arguments about having cause to terminate Coutinho’s employment, an issue to be resolved later, Ms Coutinho was entitled to her statutory termination pay entitlement of $6,103.85.

  Commentary

  There are a lot of issues to unpack in this decision.

  The first issue to consider is that of liability, that is, was the court correct to conclude that the IDEL Regulation does not oust the common law right to claim constructive dismissal? In my opinion the answer is yes. Section 8 of the ESA is conclusive on this point and the law cited by Justice Broad is well settled. I have no issues there.

  The second issue, however, is that of damages. Respectfully, I think the court got this aspect of the decision wrong.

  Statutory termination pay, said to be the extent of the plaintiff’s damages, is, of course, a statutory entitlement arising only because of the ESA.

  But the IDEL Regulation said that “a temporary reduction or elimination of an employee’s hours of work by the employer for reasons related to the designated infectious disease… does not constitute constructive dismissal.” To that definition Justice Broad added the words “under the ESA.”

  And if a temporary reduction or elimination of an employee’s hours of work by the employer for reasons related to the designated infectious disease does not constitute constructive dismissal under the ESA, then query why Ms. Coutinho is entitled to statutory termination pay. Put another way, if Ms. Coutinho’s employment was not terminated for statutory purposes, then why is she entitled to statutory termination pay?

  It would appear that what Justice Broad did was combine and confuse the issues of common law and statutory constructive dismissal, using a common law constructive dismissal to trigger a statutory entitlement. I don’t think the court can do that in the face of the IDEL Regulation.

  The challenge in this case is that it’s worth all of $6,100. Hardly worth anyone getting too fused over, although I guess they’ve already come this far.

  In my opinion someone needs to reconsider the issue of statutory damages being triggered by a common law right, where the regulations say no statutory termination has occurred at all.

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  As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.